Recent market volatility has been tough on most growth stocks. But Bakkt Holdings (NYSE:BKKT), a crypto-focused fintech firm, has faced a double-whammy. Not only has sentiment shifted with growth stocks, but the market is even more wary about jumping into BKKT stock with the crypto market moving lower as well.
This is a complete 180 from where things were just a few months back. Shortly after the completion of the special-purpose acquisition company (SPAC) merger that took it public, Bakkt skyrocketed in price.
Trading for under $10 per share at its debut, it surged to as much as $50.80 per share. News of partnerships with major names in the world of payments played a big role in this. It also didn’t hurt that cryptocurrencies were running hot at the time.
The situation may have turned on a dime. However, that’s not to say the bull case here is completely destroyed. Even if crypto prices stay volatile, increased use of crypto for everyday transactions could continue to grow. This means a strong chance that Bakkt’s revenue growth continues to climb at a rapid clip. If this plays out, shares will zoom out of the single-digits, and back to higher price levels.
The Latest With BKKT Stock
At the time it completed its SPAC merger, it seemed like Bakkt picked the perfect time to go public. In hindsight, its timing no longer looks so perfect. Once trading for over $50 per share, it’s changing hands today for around $4 per share.
Still, while market conditions have for now moved out of its favor, the “story” behind BKKT stock remains in motion. The company, which provides a variety of crypto-related services for businesses and financial institutions, continues to lock down new partnership deals.
Its most recently announced deal is one with Nexo. Bakkt will provide digital asset custody services to the crypto-exchange operator. This is just the latest of a string of deals it has inked since the aforementioned payments deals back in November. As I discussed a few weeks back, the company has also entered a deal with Manasquan Bank to enable the New Jersey financial institution’s clients to invest in/trade crypto through Manasquan’s banking app.
Granted, each of these deals is relatively small in terms of its long-term impact. But little by little, this crypto financial services provider is building up its user base. Knocked down by recent uncertainties, today’s valuation may underestimate its long-term potential.
What Matters Most When It Comes to a Bakkt Rebound
Some traders looking at BKKT stock today may see it as a way to bet on a crypto price recovery. I won’t speculate on where I think crypto is going from here. But given its track record of making big moves, it is possible that if sentiment for it shifts back to positive, we could see a strong swing back in the right direction.
Still, that may not translate into an immediate rebound for Bakkt shares. Why? While the excitement surrounding crypto up through the end of last year helped the stock, higher prices for individual cryptocurrencies is not what will drive interest back into the stock. Instead, it’s more indication that Bakkt’s user and revenue growth will carry on at an outsized pace.
As stated in a presentation to analysts given prior to the SPAC merger, besides selling its “story” to Wall Street, the fintech firm also provided financial projections for the next five years. During this timeframe, it expected to see net annual revenue soar from around $55 million to $515 million. The market may have gotten a little carried away last fall, where it took news of the two partnerships, and saw it as a sign that it was guaranteed Bakkt would deliver results in line with these numbers.
However, it’s going to take more than those two deals, plus its recent deals, to get it to that level. But if it secures more similar deals and/or adoption of crypto continues to climb for more than just financial speculation, then confidence will renew that it will continue to achieve above-average levels of growth. This should, in turn, help this beaten-down stock make its way to past levels.
The Verdict on BKKT Stock
Earning a “B” rating in my Portfolio Grader, the “story” with Bakkt is still in play. Even so, as there remains uncertainty in the stock and crypto markets, plus uncertainty as to whether use of digital assets will gain critical mass, shares could continue to struggle.
If you’re looking for an opportunity that could play out in a relative short period of time, you may want to look elsewhere. But if you have a long time horizon, and are bullish that crypto is still the future of finance, you can consider BKKT stock a buy at present levels.
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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