Crypto custodian Bakkt Holdings (BKKT) is navigating a double challenge: potential delisting from the New York Stock Exchange (NYSE) and a sudden leadership change. The company's press release attributed CEO Gavin Michael's departure to his pursuit of "other opportunities," but the timing naturally raises questions about a possible link between the two events.
On March 18, Bakkt announced that board member Andy Main would take the helm as CEO and president on March 26, succeeding Michael. However, the question remains: can this leadership change address Bakkt's core challenges – a volatile market, fierce competition, and a limited product portfolio?
Bakkt provides a software-as-a-service (SaaS) and API platform for businesses to enter the cryptocurrency market and focuses on secure custody, trade solutions, and regulated trading environments. The firm launched in 2018 with much fanfare, backed by the owner of the NYSE, the Intercontinental Exchange Inc. (ICE). It initially garnered significant attention, partnering with giants like Starbucks to provide BTC payment solutions. Bakkt Holdings' stock price on the NYSE skyrocketed in the first two weeks of trading, jumping from $8.74 to almost $43. This surge gave the company a market cap of $2.1 billion. However, since its 2021 public listing, Bakkt has struggled to gain traction. After two years, the firm discontinued its consumer app in February 2023 to focus on "B2B2C" services, providing crypto trading technology to consumer-facing institutions.
On March 13, Bakkt received a delisting warning notice from the NYSE due to its low share price falling below $1 over a consecutive 30-day period. The company was given six months to regain compliance with NYSE listing standards. While details are scarce, Bakkt is likely exploring strategies like increasing revenue streams or negotiating an exemption with the NYSE. Considering its close ties to the exchange, this is a significant blow for Bakkt.
The leadership shift comes amidst a period of uncertainty for Bakkt. According to the press release, Michael is leaving to explore "new opportunities" but will stay on as an advisor until 2025. In February 2024, the company raised concerns about its ability to continue operating, stating in a U.S. Securities and Exchange Commission (SEC) filing that it "might not be able to continue" and may lack sufficient financial resources to continue operating for the next twelve months.
However, according to Main, a recent $50 million capital raise through direct offerings has "alleviated the conditions that raise doubt about us as a going concern." The new CEO also outlined plans to cut expenses and focus on revenue growth through partnerships.
The coming weeks will be critical for Main and Bakkt. The new leadership under Andy Main must demonstrate a clear plan to address the delisting threat and ensure the company's future on the NYSE. Main's experience as an industry veteran and the recent capital raise offer a glimmer of hope, but Bakkt faces an uphill battle against the broader cryptocurrency market downturn.
Following the news, Bakkt's stock experienced a slight increase, reaching $0.63 on Thursday, and currently sits at around $0.55. The company's fourth-quarter earnings release, originally planned for March 20th, is rescheduled to today. It was done a day before the leadership change, so may provide further insight into its financial health and strategic direction. We are tuned to observe the conference.
