Bakkt's Share Slump Sparks Delisting Alarm

Bakkt Faces Delisting Risk as Stock Prices Continue to Languish, NYSE Issues Warning

Bakkt, a crypto custody firm, faces delisting from the New York Stock Exchange (NYSE) if its shares continue to linger below $1. Since its listing in October 2021, Bakkt has witnessed consecutive losses, resulting in a plummeting share price. The NYSE has issued a stern warning, threatening to pull the plug on Bakkt if it fails to meet the exchange's listing requirements.

In a recent press release on March 13, Bakkt acknowledged receiving notification from the NYSE, indicating its non-compliance with the exchange's rules. Over the past 30 days of trading, Bakkt's average closing share price remained below $1, prompting concerns from the stock exchange.

Bakkt's shares closed trading on March 13 at 60 cents, showing a modest 2.8% increase for the day. However, the company has experienced a staggering decline of nearly 42% over the month, compared to its valuation above $1. According to data from Google Finance, Bakkt's share price has indeed experienced periods of increase. One such instance may have occurred when the company initially went public on the New York Stock Exchange (NYSE). According to the provided information, Bakkt's share price reached a high of over $40 per share when it debuted on the market in October 2021. Additionally, the company's share price may temporarily rise due to positive market developments or favorable news about the company, such as obtaining regulatory approvals, releasing positive financial reports, or announcing significant partnerships. However, such temporary increases do not necessarily indicate a long-term uptrend in the company's share price or an improvement in its financial condition.

The long-term low stock price of Bakkt is due to various reasons

There are several reasons why Bakkt's share price has remained consistently below market value. Firstly, the company has faced consecutive financial losses, which may have sparked concerns among investors about its future profitability. Secondly, the high volatility of the cryptocurrency market may have impacted confidence in Bakkt as a company associated with cryptocurrencies. Additionally, the company's attempt to attract more users through the launch of a retail application ultimately proved unsuccessful, potentially undermining confidence in its business model. Lastly, amidst intense market competition, the company has yet to find an effective profit-making model, which could also contribute to its share price remaining below market value in the long term.

Bakkt Seeks Reverse Stock Split to Address NYSE Delisting Warning and Strive for Compliance Status

In response to the NYSE's ultimatum, Bakkt expressed its intent to rectify the situation and return to compliance with the exchange's standards. One potential solution under consideration is a reverse stock split, subject to shareholder approval. This strategy aims to consolidate existing shares, with the goal of elevating their market price.

Bakkt has a six-month grace period to remedy the situation. The company clarified that it could regain compliance at any point within this timeframe if its share price reaches $1 on the last trading day of any calendar month, coupled with an average share price of at least $1 over the preceding 30 trading days.

Bakkt, founded by Intercontinental Exchange (ICE) in 2018, holds a significant position in the crypto market as the majority-owned subsidiary of ICE. Despite its ambitious beginnings as a platform catering to institutional crypto transactions, Bakkt faced setbacks with its retail-oriented application, leading to its closure in February 2023.

Bakkt Seeks to Raise Funds Through New Stock Issuance to Address Cash Flow Challenges and Persistent Financial Losses

Since its inception, Bakkt has grappled with financial challenges, reporting eight consecutive quarters of net losses. In early February, the company issued a warning regarding its financial viability, expressing doubts about its ability to sustain operations for the next 12 months. To address its cash flow issues, Bakkt obtained regulatory approval in mid-February to issue $150 million worth of new shares.