Morgan Stanley initiated coverage of Coinbase Global with an Equal-weight rating and a $250 price target on Thursday, according to a note shared with TheStreet. The firm's stance reflects a view that the company's business fundamentals are strong, but the current stock valuation does not yet justify a buy recommendation.
Coinbase shares closed at $174.72 the day before the note was released. The $250 target represents roughly 40% potential upside, a gap that typically aligns with a buy rating in most financial frameworks. However, analyst Michael Cyprys maintained the neutral stance, writing in the note that he is more constructive on the franchise than on the shares at their current valuation.
Cyprys derived the $250 target by applying a multiple of 21 to his 2028 earnings estimate. He stated that this multiple is consistent with Coinbase's historical trading patterns and those of its digital-asset peers. The analyst also outlined a wide range of potential outcomes, modeling a bull case of $400 and a bear case of $50. This $350 spread hinges primarily on retail crypto trading, which currently accounts for nearly 40% of Coinbase's revenue.
The disconnect between the stock price and the underlying business has been persistent. Since Coinbase's direct listing in April 2021, the stock has declined by approximately 45%, while Bitcoin has gained about 26%, according to the Morgan Stanley note. This trend indicates that the company has not fully captured the value of the broader crypto market rise during this period.
The rating stands in contrast to a decision made by Cyprys eleven days earlier regarding a similar company. On September 1, he upgraded Robinhood Markets to Overweight from Equal-weight and raised its price target to $150, implying about 43% upside. Cyprys cited Robinhood's prediction-markets business as evidence of diversification, noting that event-contract revenue surged to $156 million in the second quarter from $10 million in the same period a year prior.
Coinbase is pursuing a similar diversification strategy through its "Everything Exchange" initiative, which includes stocks, prediction markets, and tokenized assets. The company identified this expansion as a top priority for 2026 in its fourth-quarter shareholder letter filed with the SEC. However, Morgan Stanley remains unconvinced that these efforts are currently generating results comparable to those seen at Robinhood.
The analyst identified three key factors that will determine Coinbase's future performance. First, regulatory clarity could expand the addressable market but would also allow banks and brokers to compete more directly on price. Second, the Everything Exchange could reduce reliance on crypto trading, though new products like equities often carry lower fees than core crypto services. Third, revenue from stablecoins and Base could grow alongside USDC balances, but competitors like Hyperliquid are already capturing a larger share of this income.
Market reaction to the note has been mixed. Short interest in Coinbase stock increased by nearly 30% in the week following the report, reaching 12.4% of shares available to trade, the highest level in a month. During the same period, Robinhood shares rose by almost 6%, while Coinbase fell by more than 10%.
Investors will look to two upcoming events for further clarity. The Senate is scheduled to hold a procedural vote on the CLARITY Act on September 15, a market-structure bill that Morgan Stanley considers central to Coinbase's outlook. Subsequently, Coinbase will report its third-quarter results on October 29, providing data on how much non-trading revenue is contributing to its total income.