Morgan Stanley turned bearish on Coinbase on Monday, cutting its price target for the cryptocurrency exchange by more than half and warning that profit recovery could take longer than previously expected.
Analyst Michael Cyprys reduced the target from $258 to $120, a cut of about 53%, according to a Monday report. The bank cited recent trading trends, a softer revenue outlook and uncertainty in the crypto market following Binance’s $6.3 billion hack.
Morgan Stanley still views Coinbase as one of the strongest competitors in crypto, but it expects earnings to recover more slowly than forecast, adding pressure on the share price.
Earnings and stock reaction
The downgrade followed Coinbase’s third-quarter report on Oct. 29, which showed net revenue of $1.16 billion, down roughly 34% year over year. The company posted $719 million in net income, largely driven by gains on cryptocurrency investments, while adjusted net income was $78 million.
The results sparked a selloff in crypto-linked stocks on Friday. Coinbase shares fell more than 13% in midday trading amid fallout from the Binance hack. Circle shares declined more than 9%, and Strategy fell about 8%.
Coinbase shares extended their losses on Monday, dropping more than 3.3% to $138 at the time of writing, according to Yahoo Finance data.
