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This Promising Crypto Service Stock Surges 200%

Bakkt Holdings stock shot up by more than 200% in the past five days. The company promises to help crypto and other digital assets go mainstream, and the market seems to be paying attention.

Bakkt Holdings stock (BKKT) price skyrocketed: gains of more than 200% in the past five days alone. The company went public via SPAC on October 15, riding the bullish momentum in Bitcoin. News on partnerships with giant financial services providers also helps to explain BKKT’s recent surge.

Figure 1: BKKT stock performance.

Figure 1: BKKT stock performance.

Reddit investors have taken note, as the volume of comments about the stock on the platform has shot up as well. Today, we look at what might make this company and stock compelling.

What is Bakkt Holdings?

Atlanta-based Bakkt Holdings, founded in 2018, offers cryptocurrency services and custody. The company’s vision: to power commerce by enabling users to unlock value from digital assets. The company has set its eyes on an addressable market of over $1.6 trillion in digital assets across cryptocurrencies, rewards and loyalty points, gaming assets and gift cards (see below).

On October 15, the company went public through a special-purpose acquisition company merger with VPC Impact. At an initial price offer of $9.45, BKKT dropped 8% on the first four trading days. However, on the fifth trading day, the stock embarked on a massive rally and climbed more than 250% to the peak.

Figure 2: Bakkt business explanation.

Figure 2: Bakkt business explanation.

Why BKKT peaked

On October 25, the company formed a partnership with Mastercard (MA) to offer crypto solutions. The deal aimed at increasing the adoption of cryptocurrency services, thus allowing the digital asset ecosystem to expand.

On the same day, Bakkt announced a partnership with Fiserv (FISV) to expand the company’s capabilities – like moving funds into mobile wallets and enabling practical uses of crypto and other emerging assets.

Both announcements were likely pivotal in pushing BKKT so high and so fast. Improved sentiment towards Bitcoin and other cryptocurrencies probably helped too, as the former recently reached its all-time high of nearly $67,000 per coin.

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The opportunity

Bakkt seems to be banking (pun intended) on the expansion of the digital asset space.

According to Allied Market Research, the value of the cryptocurrency service market (think hardware and software that enable the storage and exchange of assets) should increase about 13% per year through 2030. Demand for international remittances and more transparency in global payments systems are key growth drivers.

While Bakkt is often associated with the crypto world, the company sees opportunities in other digital assets: NFTs (non-fungible tokens) and in-game assets, for example. Below are the company’s views on how these assets could grow fast through 2025.

Figure 3: Bakkt addressable market opportunities.

Figure 3: Bakkt addressable market opportunities.

Our take

We believe that Bakkt could be a “moonshot play” – that is, a high-risk and high-reward bet on an industry that is still underdeveloped today, but that has sizable growth potential like few others.

Those who are bullish this stock and others like it should keep the following in mind, however:

  • Bakkt is a new company with lots to prove still. Expect shares to trade on buzz, momentum, and speculation, and not so much on fundamentals – at least for now.
  • Little is known today, with much conviction, about Bakkt’s P&L potential, and how it reconciles with current valuations. For instance, the company projects $285 million in EBITDA by the fifth year of operations, which would arguably make the stock’s current market cap of $1.3 billion enticing. Whether Bakkt can deliver those results, however, is a very different story.
  • Expect volatility here, and lots of it. The fact that BKKT has already attracted the attention of retail investors on platforms like Reddit could be a good thing (upside potential driven by FOMO, etc.) or a bad thing (painful corrections) for those who choose to buy shares.

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)