Investing.com -- Citi analysts cautioned in a note Wednesday that Coinbase (NASDAQ:COIN) stock may experience heightened volatility in the coming weeks, driven by the company's Q3 2024 earnings and the potential impact of the U.S. elections.
Citi maintains a Buy/High-Risk rating on Coinbase but lowered its price target to $275 from $345 a share. The bank warned that multiple headwinds could challenge the crypto platform.
The analysts highlight two key factors: "For results, the focus will be on spot volume share where Coinbase has experienced moderate slippage vs. competitors and/or perhaps a degree cannibalization from the BTC and ETH ETF."
Citi adds that Coinbase's performance may also be pressured by increasing domestic competition, notably from Crypto.com.
Regarding the elections, Citi views a Republican sweep as the most favorable outcome for Coinbase and the broader crypto market.
However, "a Harris Win + divided Congress likely results in more uncertainty," stated the bank.
One critical aspect of Citi's bullish stance hinges on Coinbase's ability to use the legal doctrine known as Chevron (NYSE:CVX) deference to challenge the SEC. They explain that this strategy could give the company breathing room, regardless of election results.
The report also outlines Citi's expectations for Coinbase's Q3 results, anticipating a "~18% QoQ revenue decline" as volumes normalize after a strong first half of 2024.
The firm forecasts full-year revenue at approximately $5.3 billion, reflecting a 10% reduction from previous estimates, and predicts adjusted EBITDA of $2.5 billion, down 15%.
While the Citi analysts acknowledge Coinbase's challenges, they see potential upside if regulatory developments break favorably, especially with increased pro-crypto sentiment in key congressional committees.