Morgan Stanley Initiates Coinbase at 'Equal Weight' on Cyclical Crypto Risks

Morgan Stanley began its coverage of Coinbase (COIN) with a neutral 'Equal Weight' rating and a $250 price target, according to a research note published Thursday. While the price target implies a potential upside of approximately 40% from current levels, the bank cited the crypto platform's significant exposure to the industry's inherent volatility as a reason for its cautious stance.

A Wide Range of Outcomes

Analyst Michael Cyprys justified the neutral rating by pointing to a wide range of potential outcomes for the stock, which the bank estimates to be between $50 and $400. This uncertainty reflects the company's dependence on the crypto market cycle, despite its efforts to diversify.

"We are more constructive on the franchise than the shares at current valuation," Cyprys wrote in the note. He added that retail crypto trading remains the "key swing factor" for the business, accounting for about 40% of revenue.

Diversification vs. Volatility

Morgan Stanley acknowledged Coinbase's evolution from a simple exchange into a comprehensive digital asset platform. The company's services now include:

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• Retail and institutional trading
• Custody and staking
• Stablecoins and derivatives
• Payments and on-chain infrastructure like its Base network

The note highlighted that Coinbase ended the second quarter with 7.6 million monthly transacting users and $246 billion of assets on its platform. However, Cyprys stated that this diversification, while raising the "earnings floor," does not eliminate the cyclical nature of its core business.

Valuation and Forecast

The firm's $250 price target is based on a valuation of 21 times its 2028 adjusted EBITDA forecast of approximately $3.0 billion. This multiple is in line with Coinbase's historical average and the median for its digital-asset peers, according to the note.

Morgan Stanley's model anticipates a "cyclical reset" in 2026, followed by a sharp rebound in 2027 before normalizing in 2028. While future growth drivers like regulatory clarity and expansion into new asset classes could expand Coinbase's market, they are also expected to introduce more competition and pricing pressure.