Bakkt Holdings, Inc. (NYSE: $BKKT) is a crypto custody and trading platform created by Intercontinental Exchange (ICE), the company behind the NYSE. It allows investors to gain exposure to crypto assets and futures like they would trading fiat currencies, with the added benefit of regulatory oversight.
On Monday, March 25, 2024, Bakkt released its Q4 and full-year fiscal 2023 results to a positive market reception.
Bakkt Fourth Quarter Results
In the fourth quarter, Bakkt’s total revenue was $214.5 million compared to $15.9 million in Q4 2022, while total operating expenses came in at $293 million. It reported $199.4 million in gross crypto services revenue compared to $0.3 in Q422 and clearing and brokerage fees of $197.8 million.
The net loss in Q423 fell 76% to $78.7 million, compared to $326.4 million in Q422, while the adjusted EBITDA loss declined by 38% to $19 compared to $30.5 million in Q4 fiscal 2022.
According to the report, one of the highlights of the fourth quarter was the acquisition of Apex Crypto, renamed Bakkt Crypto, which drove the increase in its gross crypto service revenue.
With its balance sheet strengthened the crypto custody firm aims to scale its business further in 2024. Bakkt’s incoming president and CEO, Andy Main, said the company will focus on several initiatives this year. The executive explained:
Full Year Results
For the full year, Bakkt reported a revenue of $780.1 million compared to $56.2 million in fiscal 2022. Its full-year net loss fell 89% to $225.8 million compared to a $1.99 billion net loss in fiscal 2022. The company’s full-year adjusted EBITDA loss declined 22% to $93.9 compared to $119.7 in fiscal 2022.
Bakkt’s Fiscal 2024 Outlook
For the full year, Bakkt forecasts revenue of $3.29B-$5.11B, including gross crypto revenue of $3.24B-$5.06B and net loyalty revenue of $53M-$57M.
The company expects $3.22B-$5.03B in crypto costs and total operating expenses of $160M-$170M. It expects to end fiscal 2024 with total cash of $35M-$50M.
Commenting on the results, CEO Andy Main stated, “Our focus for 2024 is on a set of strategic initiatives that will provide our business with efficient scale, including broadening our client network, expanding our product set and prudently managing expenses.”
On February 7, 2024, Bakkt had filed an amendment with the SEC with a section stating it may not “continue as a going concern.” It was running low on cash at the time, affecting its ability to continue funding operations. However, the latest financial results have alleviated the company’s financial situation.
Bakkt Announces Leadership Change
On March 18, 2024, Bakkt announced that Andy Main, a board member since the company went public in 2021, would become the new CEO. Following the leadership change, the company rescheduled the release of its Q4 and fiscal 2023 results to Monday, March 25, 2024.
Bakkt Announces Deal with Unchained
On March 8, 2024, Bakkt announced it was now a part of Unchained’s Collaborative Custody Network. The collaboration will provide Bitcoin holders with enhanced security when using a vault secured by multiple institutional key agents. Bakkt is now an institutional signatory for Unchained’s multi-sig vaults.
Commenting on the deal, Unchained’s CEO Joe Kelly said, “As a regulated custodian, Bakkt is an ideal fit for our network.”
Bakkt Stock Performance
Following its fourth quarter results, which helped alleviate concerns about its ability to continue operations, BKKT shares rose 4.4391% at the close of trading on Monday, March 25, 2024, to $0.5623 per share. On Tuesday, March 26, the stock lost all of Monday’s gains, losing over 16% of its value to trade at $0.47 per share as of 12:19 PM EDT.
However, the stock is still down 73.48% YTD, following the concerning SEC filing in early February. In the past 12 months, BKKT has underperformed the market, losing 62.26% of its value, compared to the 31.40% gain of the S&P 500 in the same period.
Bakkt has a market cap of $75.35M and is very cheap, based on its current multiples. It has a price/sales ratio of 0.08, an Enterprise Value/Revenue ratio of 0.02, and an Enterprise Value/EBITDA ratio of -0.10. The shares are trading below the 50 and 200-day moving averages of 0.9824 and 1.3091, respectively.
BKKT Forecast
Two Wall Street analysts give BKKT stock an overall moderate buy rating. They forecast a broad range for the stock, with a high of $2 and a low of $0.75. Their average forecast is $1.38, a 145.42% upside based on the last closing price.
Should You Add BKKT to Your Portfolio?
Bakkt’s multiples indicate that the stock is quite cheap. Despite this, it has a compelling use case whereby it provides a platform for the safe storage and use of crypto assets. However, its limited revenue stream, mainly crypto transactions, has meant that its revenue has been low during bearish crypto market conditions.
Essentially, a bet on Bakkt is a bet on the growth in crypto adoption and its associated volatility. It is backed by ICE, which manages the New York Stock Exchange and offers traders a regulated platform.
As the crypto market heats up and Bakkt forecasts a huge surge in full-year revenue, analysts’ moderate buy rating accurately represents its medium-term performance.
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