Sometimes bad news can be good news. Indeed, it appears that’s the market we’re in right now. One company that’s exemplifying this today is digital asset marketplace Bakkt (NYSE:BKKT), which announced some significant job cuts. Shares of BKKT stock are up approximately 1% on the news.
Like other companies in the crypto sector, job cuts are becoming an important piece of the puzzle when it comes to profitability. Today’s significant 15% layoff across the company’s exempt employee base is one that investors appear to like. Accordingly, it’s unsurprising to see the stock rise as much as 6% from trough to peak in today’s intraday price action on the news.
So long as we remain in crypto winter, more announcements may be foredooming. That said, let’s dive into what investors may want to make of this news, as it relates to Bakkt.
Why Is BKKT Stock Making a Comeback Today?
As crypto valuations continue to decline, transaction volumes across the sector have taken a hit. Thus, digital asset marketplaces like Bakkt are certainly feeling the pain.
With revenue on the decline, cost-cutting is among the only levers such companies have to pull. Until we return to the next fast-paced bull market, this is likely the way things will be.
Bakkt noted in its press release today that the company anticipates a potentially longer and more painful downturn in the crypto economy than previously thought. That’s certainly not great news for those bullish on this sector. However, this sort of rhetoric is what many investors want to hear. In this market, companies that keep it real are those that may be viewed as survivable.
Accordingly, how Bakkt chooses to allocate its resources, and where the company focuses on growth moving forward, will be important. We’re not in a growth-at-all-costs market anymore. Thus, the impetus is on companies to limit their spending and improve profitability. The fact that Bakkt is moving in this direction appears to have assuaged investors.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.