Bakkt Weighs Sale or Breakup Amid Crypto Industry Revival

Bakkt Weighs Sale or Breakup Amid Crypto Industry Revival

FinanceSEC

By Jakub Lazurek

08 Jun 2024 (11 days ago)

2 min read

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Bakkt considers a strategic sale or breakup amid financial struggles and the crypto industry's recovery, with new CEO Andy Main at the helm.

Bakkt Holdings Inc., a crypto trading and custody platform from the NYSE parent company, is considering a strategic sale or breakup despite the crypto market's recent recovery. This decision is driven by ongoing financial challenges. In March, Bakkt appointed Andy Main as CEO, replacing Gavin Michael amid threats of delisting from the NYSE. Main, a board member since Bakkt's public listing in 2021, took over as Michael left for other opportunities, but will stay on as an advisor until March 2025.

Bakkt has hired a financial advisor to explore various strategic options, including a potential breakup. No final decision has been made, and the company might stay independent. A Bakkt representative declined to comment. Financial difficulties are pressing Bakkt to consider these options. In February, the company sought SEC approval to raise up to $150 million over three years due to liquidity problems. Additionally, Bakkt plans a reverse stock split to improve finances. They raised $40 million from institutional investors and another $10 million to boost capital.

Despite efforts, Bakkt reported a first-quarter loss of $1.86 per share, better than the expected $2.08 loss. The total first-quarter loss was $21 million on $855 million in revenue. These issues highlight the urgent need for Bakkt to explore strategic alternatives. New CEO Andy Main aims to guide Bakkt through this challenging period by enhancing institutional crypto capabilities, expanding the client base, and moving towards financial stability. "Andy has the expertise to lead from this inflection point," said Michael.

Other companies in the crypto space are expanding post-2022 downturn. Robinhood recently bought European crypto exchange Bitstamp, and Riot Platforms proposed taking over rival Bitfarms, showing a trend of consolidation and growth. The crypto industry's revival shows increased activity and investment, but Bakkt's struggles highlight uneven recovery. While some firms capitalize on the upswing, Bakkt faces significant challenges, prompting consideration of a sale or breakup.

Bakkt's future remains uncertain as it reviews its options. The strategic review will determine whether Bakkt continues independently or pursues a sale or breakup, a decision closely watched by the crypto community. In summary, Bakkt's exploration of strategic options is a response to financial challenges and industry trends. With a new CEO and significant financial pressures, Bakkt is at a critical point, and the outcome will shape its future in the evolving crypto landscape.

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