Morgan Stanley Halves Coinbase Price Target Amid Slowing Profit Recovery

Analyst Michael Cyprys reduced the price target from $258 to $120, a 53% drop, referencing recent trading patterns, a dimmer revenue forecast, and increased market uncertainty following Binance's $6.3 billion security breach, as detailed in the Monday report.

While the bank continues to regard Coinbase as a leading player in the crypto sector, it anticipates a slower recovery in profitability than previously expected, adding downward pressure on the company's share price.

This valuation cut followed Coinbase’s announcement on October 29, showing a nearly 34% decrease year-over-year in third-quarter net revenue, down to $1.16 billion. The exchange recorded $719 million in net income, primarily driven by cryptocurrency investment gains, with adjusted net income at $78 million.

The earnings report triggered a selloff in cryptocurrency-related stocks on Friday; Coinbase's shares plunged more than 13% during the trading day as the effects of the Binance hack lingered. Shares of Circle dropped over 9%, and Strategy shares declined by around 8%.

Coinbase shares continued their decline on Monday, shedding more than 3.3% to reach $138 at the time of reporting, according to Yahoo Finance.

Morgan Stanley's updated outlook underscores the challenges facing Coinbase amid a shaken crypto market, highlighting the potential for a prolonged earnings recovery and its impact on investor confidence.