Morgan Stanley downgraded Coinbase to underweight from equal-weight and cut its price target by 53%, to $120 from $258, citing weaker trading activity and uncertainty in the cryptocurrency market that have clouded the exchange’s earnings outlook.

Analyst Michael Cyprys said confidence in Coinbase’s earnings recovery had deteriorated because of subdued trading volumes, a softer revenue outlook and concerns following the $6.3 billion security breach at Binance.

The downgrade followed Coinbase’s report of third-quarter revenue of $1.22 billion, a 35% decline from the same period a year earlier and 6% below Morgan Stanley’s estimate. Transaction revenue fell 44% to $590 million, while subscription and services revenue declined 20% to $570 million. Coinbase’s third-quarter report is available here.

Morgan Stanley estimates that Coinbase’s fourth-quarter 2026 transaction revenue will be about $608 million, roughly half its previous forecast of $1.2 billion. The revised estimate reflects weaker-than-expected trading activity.

The bank also reduced its revenue forecasts for 2027 and 2028 by 28% and 18%, respectively. Its adjusted earnings before interest, taxes, depreciation and amortization estimates were cut by 47% and 25% for the same years.

Morgan Stanley’s revised 2028 adjusted EBITDA forecast of $2.4 billion is about 14% below its 2025 level, indicating a more gradual earnings recovery than previously anticipated.

The recent Binance hack did not directly affect Coinbase, but Morgan Stanley said it could further weigh on investor confidence in centralized cryptocurrency exchanges. The bank said this could reduce retail trading activity and slow institutional adoption. BitKE previously reported on the incident in “Binance Gets Hacked in the Largest Crypto Exploit in History”.

Coinbase shares fell more than 10% after the company released its earnings report and extended their losses several days later as investors assessed the weaker outlook.

Crypto-linked stocks also declined. Coinbase Global led the move, while a $6.3 billion Binance hack added pressure from falling digital-asset revenues and a broader technology-sector sell-off. In a post published on X on October 31, 2026, BitKE wrote:

REALITY CHECK | #Coinbase Leads Crypto #Stock Sell-Off as #Binance Hack Deepens Market Pressure Crypto-linked stocks tumbled, led by Coinbase Global, as a $6.3 billion Binance hack compounded pressure from declining digital-asset revenues and a broader technology-sector sell-off. @coinbase shares fell more than 13% after the exchange reported a 34% year-on-year decline in Q3 2026 net revenue to $1.16 billion. @circle dropped more than 9%, while Bitcoin treasury company, @Strategy, fell about 8%. Bitcoin #miners and blockchain financial #services firms also posted sharp losses. Details: #BinanceHack #Coinbase #CryptoReality — BitKE (@BitcoinKE) October 31, 2026

Despite the downgrade, Morgan Stanley said Coinbase remained one of the best-positioned platforms in the cryptocurrency industry. The bank pointed to the company’s regulated U.S. operations, custody infrastructure and broader product strategy as factors supporting its competitive position.

However, Morgan Stanley said it sees greater downside risk to earnings expectations and valuation until trading volumes recover, newer products generate more revenue and regulatory uncertainty diminishes.