Morgan Stanley Slashes Coinbase Price Target by Half Amid Ongoing Stock Decline
Morgan Stanley has downgraded its outlook on Coinbase stock, citing declining transaction volumes and concerns stemming from the Binance security breach that are casting shadows over the company's revenue expectations.
On Monday, major investment banking firm Morgan Stanley adopted a bearish stance on Coinbase (COIN), slashing its price target by more than fifty percent while cautioning that the digital currency exchange platform's profit margins may take longer to rebound than initially anticipated.
In a research note released on Monday, analyst Michael Cyprys revised downward the price target for the stock from $258 to $120, representing approximately a 53% reduction. The analyst pointed to current trading patterns, a weaker revenue forecast, and volatility within the cryptocurrency sector following the $6.3 billion security breach at Binance as key factors behind the adjustment.
Despite the downgrade, the financial institution continues to view Coinbase as among the most formidable players in the cryptocurrency space, though it anticipates that earnings will take a more prolonged path to recovery than earlier projections suggested, which is expected to apply additional downward pressure on the stock's valuation.
This rating adjustment arrives just days following Coinbase's disclosure of an approximately 34% year-over-year drop in third-quarter net revenue, which came in at $1.16 billion when reported on Oct. 29. The cryptocurrency exchange platform recorded net income of $719 million, with a significant portion attributable to gains realized from its cryptocurrency investment portfolio, while its adjusted net income stood at $78 million.
The quarterly financial results triggered a wave of selling in cryptocurrency-related equities last Friday, with Coinbase shares plummeting more than 13% during midday trading sessions as investors reacted to the ramifications of the Binance security incident. Shares of Circle experienced a decline exceeding 9%, while Strategy saw its stock price drop approximately 8%.
The downward trajectory for Coinbase shares continued into Monday's trading session, with the stock declining an additional 3.3% to reach $138 at the moment of publication, based on data compiled by Yahoo Finance.
