TL;DR
- Bakkt, a crypto platform backed by ICE, is facing a severe cash crunch and may not be able to operate for the next 12 months.
- Bakkt has failed to attract enough users and revenue in the crypto market, and its stock has plunged from over $40 to below $2.
- Bakkt may need a massive bailout from its parent company or another partner, or it may go out of business.
Bakkt, the cryptocurrency platform backed by the Intercontinental Exchange (ICE), the owner of the New York Stock Exchange (NYSE), is in deep trouble. The company has warned that it may not be able to continue its operations due to a severe cash crunch and a rapidly changing crypto market.
In a recent filing with the U.S. Securities and Exchange Commission (SEC), Bakkt revealed that it does not have enough cash and restricted cash to fund its operations for the next 12 months. The company also said that it cannot guarantee that it will be able to increase its revenues substantially enough to generate sustainable profits and cash flows.
Bakkt blamed its financial woes on several factors, including the disruptions and uncertainties in the crypto industry, the regulatory and legal challenges, the competition from other players, and the potential loss of banking and payment services.
The company also admitted that it may face difficulties in developing and maintaining effective internal controls over its financial reporting, which could harm its reputation and business. Bakkt, which was launched in 2018 with high hopes of bringing institutional investors and mainstream consumers into the crypto space, has struggled to live up to its expectations.
Bakkt Struggled to Gain Traction and Revenue in the Crypto Market
Despite offering crypto custody and trading services, as well as partnering with companies like Starbucks and Nexo, Bakkt has failed to gain significant market share and user adoption. Bakkt’s stock, which went public in 2021 under the ticker NYSE: BKKT, has also suffered a steep decline. The stock, which once soared to over $40, has now plummeted to below $2, reflecting the investor sentiment and confidence in the company.
To address its cash crisis, Bakkt is considering issuing up to $150 million in registered securities in public markets. The company said that it intends to use the proceeds for working capital and general corporate purposes, but did not specify how it plans to allocate the funds.
However, some analysts and observers are skeptical that Bakkt can survive without a massive bailout from its parent company, ICE, or another strategic partner. They argue that Bakkt’s business model is flawed and that it faces too many challenges and risks in the volatile and competitive crypto industry.
Bakkt’s fate remains uncertain, as the company faces an existential crisis. Will it be able to turn around its fortunes, or will it become another casualty of the crypto market?
