Since its launch, Bakkt has performed poorly and was once at risk 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 individuals 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 skyrocket.
Trump Media, of which Trump holds a majority stake (NASDAQ: DJT), surged double digits just minutes after the report was published. The company operates the Truth Social application, closing up more than 16%. Bakkt experienced multiple halts due to excessive volatility, closing up over 163%.
Performance has been mediocre, once at risk 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 from investors including Boston Consulting Group, Galaxy Digital, ICE, and Microsoft's M12 venture fund, but has struggled to become profitable, with its latest quarterly report showing 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 significant; former Bakkt CEO Kelly Loeffler was co-chair of Trump's inauguration committee.
Loeffler's husband is Intercontinental Exchange CEO Jeffrey Sprecher. In 2019, Georgia Governor Brian Kemp appointed Loeffler to fill the Senate seat vacated by Senator Johnny Isakson due to health reasons; Loeffler subsequently resigned from her executive position at Bakkt. However, in the runoff of the special election for the Senate seat, Loeffler was defeated by Democratic Senator Raphael Warnock.
Bakkt previously stated that its cryptocurrency custody business might be shut down, which has received regulatory approval from New York authorities. Individuals familiar with the TMTG negotiations indicated that this business would not be included in the deal. In the three months ending September 30, the custody business reported an operating loss of $27,000 and revenue of $328,000.
Due to sluggish stock prices, Bakkt faced the risk of delisting from the New York Stock Exchange until it performed a 1-for-25 reverse stock split in April. Last week, its stock price rose by 15%.
Expanded cryptocurrency territory, stock performance greater than fundamentals
The Trump family's entry into the cryptocurrency market is accelerating. Its cryptocurrency project World Liberty Financial, launched in September, along with several commitments made during the campaign related to digital assets (such as establishing a Bitcoin reserve, creating a mining-friendly environment, and replacing the SEC chairman), reflects 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 the Trump administration, have led to significant fluctuations in the stock price of TMTG, the parent company of Truth Social, with billions of dollars in gains and losses leading up to the election. However, TMTG's revenue this year was 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 data, the average daily visits to the Truth Social website this month was 646,000, while the daily visits to Musk's X platform were 155 million.