Almost as quickly as it soared in price Bakkt (NYSE:BKKT) has taken a serious plunge. In recent weeks, BKKT stock has lost over 60%. But the selling may be overdone in this young company.
Thanks to a spate of game-changing partnership news, shares in the crypto-focused financial services company went parabolic. In a little over a week, BKKT stock went from under $10 per share, to briefly above $50 per share.
But now, much of the excitement around it has cooled off. This is mainly because its recent quarterly earnings release has indicated it’s still far away from having its breakout moment. As a result, it’s currently back below $20 per share, and trending lower. That said, even if you “missed out” on buying it before its brief spike and subsequent plunge, I wouldn’t say you’ve missed out on it completely. At least, if you’re approaching it as a long-term position.
With all the big news out of this company in such a short span of time, it’s clear the market got well ahead of itself. However, as it pulls back, now may be the best time to enter a position.
It’s rebound may not be immediate. In fact, shares could see more volatility in the near-term. But going forward, as it makes more progress rolling out its unique platform, the level of excitement seen last month will make its return.
BKKT Stock at a Glance
Interestingly, prior to the partnership news, which I’ll go into more detail about below, the market was lukewarm about Bakkt. Debuting in the public markets via a special purpose acquisition company (SPAC) deal with VPC Impact Acquisition Holdings, the market yawned when it first started trading just a few days before its incredible run-up in price.
At the time of its deSPACing, it made sense why investors were blasé about BKKT stock. Up until that point, the company had oversold, and under delivered. For example, in an investor presentation in early 2021, it projected it would have 9 million users by year’s end. What is the size of its user base as of this writing? Just 1.7 million. However, with its two recently-announced deals, the prospect that it will experience tremendous user growth going forward has improved.
The first bid deal is its partnership agreement with a big name in global payments. With this deal, this processor will integrate Bakkt’s crypto-related financial services solutions throughout its network. This will enable banks to issue cards, powered by its platform, that enable users to make purchases using crypto. Additionally, this will enable these same issuers to operate card rewards programs denominated in cryptocurrencies rather than in dollars.
The second potentially game-changing partnership was announced in October. I’m talking about its deal with another global payments giant. This partnership gives Bakkt access to provide its crypto-related solutions to financial institutions and merchants that use this payment company’s network.
The Takeaway From its First Earnings Release
Given it happened after news broke of two major developments, it’s clear the more than five-fold hot run BKKT stock went through wasn’t the product of some sort of frenzy from Reddit traders. Again, it was simply a case of investor sentiment shifting too quickly, to the point where investors went from being too pessimistic to getting a bit ahead of themselves.
Both these deals pave the way for massive growth. But it’s going to take some time before these partnerships translate into increased revenues, and in turn, a move to profitability for Bakkt. That was on full display when the company had its first quarterly earnings release. For the quarter ending Sep. 30, it generated just $9.1 million in revenue. Losses came in at $28.8 million, as Bakkt is investing heavily to expand its platform.
Yet while its earnings release is bringing expectations back to earth, I wouldn’t get too pessimistic about Bakkt. This is an early stage company that is only beginning to ramp-up its operations. This, of course, doesn’t guarantee shares won’t continue to drop. They might, considering how so many jumped into it as a short-term play.
Once this news is fully absorbed, the dust will settle. At that point, with shares less “hot” than they were just a few weeks ago, an opportunity to enter a position may emerge.
The Verdict on BKKT Stock
Coming in with a “B” rating in my Portfolio Grader, Bakkt is a high-potential play that will likely continue to see high volatility between now and when its platform starts to gain critical mass.
With this, you either need to buy now and patiently wait for it to take off or wait for things to settle down. Far from a fad stock despite its recent to the moon moves, BKKT stock is an interesting way to play crypto’s accelerating entry into the mainstream.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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