Bakkt Stock Plummets 27% as Major Clients Exit
2min read Bakkt Holdings, a cryptocurrency custody firm, experienced a significant drop in its stock price, falling over 27% on March 18. This decline followed the announcement that two major clients, bank of america and Webull, would not be renewing their commercial agreements with the company.
The regulatory filing on March 17 revealed that Bank of America had notified bakkt that it would not renew its partnership, which is set to expire on April 22. Additionally, the brokerage platform Webull decided to terminate its agreement upon its expiration on June 14. These developments represent a substantial impact on Bakkt’s revenue streams. Bank of America accounted for approximately 17% of Bakkt’s loyalty services revenue in the nine months ending September 30, 2024. The departure of Webull is even more impactful, as it represented about 74% of the company’s crypto services revenue during the same period.
The stock continued to decline after regular trading hours, further reflecting investor concerns. The company’s latest rescheduling of its earnings conference call to March 19 has added to the market uncertainty. Bakkt was founded in 2018 by the Intercontinental Exchange, which maintains a 55% stake in the company and also owns the New York Stock Exchange.
The news has already sparked legal action. The Law Offices of Howard G. Smith announced a possible class action lawsuit against Bakkt, alleging federal securities violations. The potential lawsuit claims that the terminated agreements, combined with the delayed earnings call, caused the stock price to fall, thereby injuring investors. As of the reporting time, Bakkt, Bank of America, and Webull had not responded to requests for comment on the situation, leaving many questions unanswered as investors try to assess the company’s future prospects.
This isn’t the first time Bakkt has faced significant challenges. In November last year, Bakkt’s share price jumped over 162% to $29.71 after reports claimed Donald Trump’s media company was in advanced talks to acquire the firm. Earlier challenges have also plagued the company. Bakkt’s parent company reportedly considered selling it or breaking the firm into smaller entities in June. Bakkt has struggled with stock exchange compliance as well. The company received a notification from the NYSE in March that it wasn’t meeting the stock exchange’s listing rules after its stock spent 30 days closing below $1 on average.
The loss of two major clients comes at a challenging time for Bakkt. The company has requested an extension to file its 2024 annual report with the SEC, further adding to market uncertainty. Monday’s stock performance reflected the market’s negative reaction to the news. In after-hours trading, some reports indicated the drop was even steeper, with shares falling as much as 35% to $12.83. Bakkt went public in October 2021 through a merger with VPC Impact Acquisition Holdings. Shortly after going public, the stock reached its all-time high before beginning its long decline to current levels.
Bakkt’s current stock price reflects a massive decline from its peak performance. Overall, BKKT is down more than 96% from its all-time high of $1,063, which it reached on October 29, 2021. The company’s struggles highlight the challenges faced by cryptocurrency firms in maintaining stable revenue streams and client relationships. The loss of key clients and the delay in earnings reports have raised concerns about Bakkt’s financial health and future prospects. Investors will be closely watching the company’s next moves and the outcomes of any legal actions to gauge its ability to navigate these challenges.
