Bakkt has had mediocre performance since its launch and was once on the verge of delisting.
Written by: BitpushNews
As he prepares to take office around January 20, 2025, Trump continues to expand his new territory in the cryptocurrency field.
According to the Financial Times, Donald Trump's social media company, Trump Media & Technology Group, is in deep negotiations to acquire the cryptocurrency trading platform Bakkt.
According to two people familiar with the negotiations, Trump Media will fully acquire Bakkt, with Trump promising to retain his 53% stake; the valuation and financial terms have not been disclosed.
This news caused the stock prices of both companies to soar.
Trump Media, which is majority-owned by Trump (NASDAQ stock code DJT), surged double digits just minutes after the report was published. The company operates the Truth Social app, which closed up over 16%. Bakkt, having experienced multiple trading halts due to excessive volatility, closed up over 163%.
Mediocre Performance, Once on the Verge of Delisting
Bakkt was launched by the Intercontinental Exchange (ICE) in 2018 and went public in October 2021, primarily providing technology services for cryptocurrency investors. Before going public via SPAC, Bakkt raised hundreds of millions of dollars from investors such as Boston Consulting Group, Galaxy Digital, ICE, and Microsoft's M12 venture fund, but has struggled to become profitable. Its latest quarterly report showed total revenue of $328.4 million and an operating loss of $27.4 million, a 48% reduction in losses compared to the same period last year.
Trump's relationship with Bakkt is noteworthy; Bakkt's former CEO Kelly Loeffler was co-chair of Trump's inauguration committee.
Loeffler's husband is Jeffrey Sprecher, CEO of the Intercontinental Exchange. In 2019, Georgia Governor Brian Kemp appointed Loeffler to replace Senator Johnny Isakson, who resigned for health reasons. Loeffler subsequently stepped down from her executive position at Bakkt. However, she was defeated by Democratic Senator Raphael Warnock in the runoff election for the Senate seat.
Bakkt had previously indicated that its cryptocurrency custody business might be shut down, which had received regulatory approval from New York authorities. Sources familiar with the TMTG negotiations stated that this business would not be included in the deal. For the three months ending September 30, the custody business reported an operating loss of $27,000 and revenue of $328,000.
Due to its low stock price, Bakkt faced the risk of delisting from the New York Stock Exchange until it conducted a 1-for-25 reverse stock split in April. Last week, its stock price rose by 15%.
Expanding Cryptocurrency Landscape, Stock Performance Exceeds Fundamentals
The Trump family's foray into the cryptocurrency market is accelerating. Its cryptocurrency project, World Liberty Financial, launched in September, along with several promises related to digital assets made during the campaign (such as establishing a Bitcoin reserve, creating a mining-friendly environment, and replacing the SEC chairman), demonstrate Trump's strong interest in the cryptocurrency industry.
This interest is directly reflected in the market. As Trump wins the election, retail investors' expectations for the Republican Party, along with optimistic expectations for favorable cryptocurrency policies from a Trump administration, have caused significant fluctuations in the stock price of TMTG, the parent company of the Truth Social platform, which has seen billions of dollars in volatility in the lead-up to the election. However, TMTG's revenue this year is only $2.6 million, with a net loss of $363 million, yet its equity valuation exceeds $7 billion.
The user base of Truth Social is also relatively small; according to Similarweb, the average daily visits to the Truth Social website this month were 646,000, while the daily visits to Musk's X platform were 155 million.
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