In a significant shift towards embracing digital currencies, Donald Trump’s media enterprise, the Trump Media and Technology Group (TMTG), is reportedly in advanced talks to acquire Bakkt, a cryptocurrency trading platform owned by the Intercontinental Exchange (ICE). As reported by the Financial Times on November 18, this potential all-share deal reflects TMTG’s strategic aim to diversify its portfolio and establish a foothold in the rapidly evolving cryptocurrency market.
The news has generated a remarkable response, resulting in a staggering 165% increase in Bakkt’s share price, pushing it up to $29, according to data sourced from CryptoSlate. This reaction highlights the market’s enthusiasm about the potential alliance and the perceived value that would stem from this acquisition, especially within an industry characterized by volatility and rapid growth.
Despite TMTG’s valuation skyrocketing to approximately $6 billion, the group’s reported revenue for the current year sits at a modest $2.6 million. This disparity raises questions about the sustainability of such valuations, especially as the media firm navigates the tumultuous waters of public interest and scrutiny. Traditionally, companies featuring such a vast difference between revenue and evaluation are under significant pressure to either prove their market worth or face a recalibration that can lead to substantial financial repercussions.
While Bakkt has continued to face challenges in terms of profitability—evidenced by its narrow escape from delisting due to its reverse stock split earlier this year—the institutional orientation of its trading platform could offer strategic advantages for TMTG. Currently, Bakkt aims to cater predominantly to institutional investors, a sector critical for the maturation of cryptocurrency as a mainstream financial asset.
Sources indicate that as TMTG moves forward with its plans, Bakkt’s crypto custody operations, which have remained largely unprofitable, are excluded from the acquisition. This segment, which includes the safe-keeping of major cryptocurrencies such as Bitcoin and Ethereum, generated a mere $328,000 in revenue with a notable operating loss of $27,000 in the third quarter of 2023. The decision to leave this aspect of the business behind demonstrates TMTG’s intention to mitigate risk while concentrating on the segments of Bakkt that align with its potential growth in the digital currency sector.
Given Bakkt’s challenges and the volatility within the cryptocurrency market, questions linger about how effective this partnership might be. TMTG’s momentum in the crypto domain is set against the backdrop of its stablecoin-focused venture, World Liberty Financial, which reflects Trump’s operational push into digital currencies.
Lastly, the connections between Trump and Bakkt are noteworthy; the company’s initial chief executive, Kelly Loeffler, previously served as a close ally to Trump and held a prominent role in his inauguration committee. This web of alliances could provide TMTG with not only access to a functioning crypto framework but also a network facilitating market entry and legislative advocacy.
As these negotiations unfold, the combination of TMTG’s media influence and Bakkt’s trading capabilities may catalyze significant developments in the crypto space, although skepticism about the profitability and sustainability of such ventures remains. Ultimately, while this acquisition could pave the way for gains in an emerging market, it invites a cautious optimism—testament to both potential opportunities and inherent risks in cryptocurrency.
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