Morgan Stanley Pulls the Bear Trigger on Coinbase

Why this matters: Coinbase has absorbed a wave of post-earnings target cuts without a single downgrade, until now. Morgan Stanley's move today breaks that pattern and arrives as the stock trades 25% below where most analysts still have their targets.

The Downgrade That Stands Apart

Every other firm that touched COIN after the October 29 earnings print cut its price target and moved on. Morgan Stanley went further. Analyst Michael Cyprys downgraded the stock to Underweight from Equal-Weight and slashed his target 53%, from $258 to $120. That $120 target now ties Barclays for the most bearish on the Street, and it sits 16% below Friday's close of $143.54.

The contrast with peers is stark. Goldman Sachs kept its Buy and lowered to $210. JP Morgan held Overweight and barely moved, from $189 to $187. Canaccord kept Buy with a $275 target. Cantor Fitzgerald reiterated Overweight at $212 without touching the number. Those four firms see 30% to 90% upside from here. Morgan Stanley sees downside.

The consensus mean, updated as of this morning, sits at $199.56. COIN is trading at a 28% discount to that figure.

Bears Unwind, Then the Borrow Tightens

Before today's downgrade, the short interest picture was moving in the opposite direction. Shorts cut their exposure by 7.7% over the past week, pulling short interest down to 9.8% of free float. That is notable: bears were covering into the earnings sell-off, not adding.

Yet even as short positions shrank, the cost to borrow jumped 67% over the same week to 0.40%. The lending market is tightening even with fewer shares short. Availability remains very loose at 584%, so there is no squeeze dynamic here. But the CTB move suggests the shares that remain on loan are being held by more committed borrowers, not momentum followers looking for an easy exit.

The Bull and Bear Picture

The bear case centres on stablecoin revenue. A 10.7% cut to that line drove the subscription and services segment estimate 5.7% lower, landing 4.0% below consensus. Management also moderated its second-half 2026 and full-year 2027 assumptions, with the FY27 EBITDA estimate now down 8% to $3.1 billion.

The bull case is not gone. Coinbase's spot volume fell only 2% quarter-on-quarter against a 7% decline for the broader crypto market, and custody already stores roughly 12% of global on-chain assets. Canaccord's $275 target and Goldman's $210 both rest on that institutional franchise. The EPS momentum 30-day factor score sits at the 100th percentile, the highest possible reading, even after the guidance moderation.

The next earnings date is February 11, 2027, 101 days away. Between now and then, the Morgan Stanley downgrade is the clearest change in the professional positioning landscape.

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• Short interest: 9.8% of free float, down 7.7% in one week
• Cost to borrow: 0.40%, up 67% week-on-week
• Availability: 584% (loose)
• Stock: $143.54, down 12.7% over the past week
• Consensus target: $199.56 (12 hold, 2 sell as of November 2)
• Morgan Stanley target: $120, Underweight (downgraded from Equal-Weight)