TLDR
- Bakkt Holdings (BKKT) shares fell 27-37% after losing two major customers: Bank of America and Webull
- Bank of America represented 17% of Bakkt’s loyalty services revenue, while Webull accounted for 74% of its crypto services revenue
- Bank of America’s agreement expires April 22, and Webull’s contract ends June 14
- Bakkt postponed its Q4 earnings conference call twice, now scheduled for March 19
- Bakkt’s stock is down over 96% from its all-time high of $1,063 reached in October 2021
Bakkt Holdings shares took a steep dive this week as the cryptocurrency exchange and custody firm announced the loss of two major clients.
The stock closed down 27.28% at $9.33 on March 18, following the revelation that both Bank of America and Webull would not renew their commercial agreements with the company.
The news came via a regulatory filing on March 17, sending aftermarket trading into a tailspin. Bakkt’s stock initially plummeted 35-37% in after-hours trading to $12.83, according to various reports.
Bank of America has opted not to renew its commercial agreement with Bakkt when it expires on April 22. The banking giant accounted for approximately 17% of Bakkt’s loyalty services revenue in the nine months ending September 30, 2024.
The blow was compounded by news that Webull Pay would also end its relationship with Bakkt when their contract expires on June 14. Webull represented a substantial 74% of Bakkt’s crypto services revenue during the same nine-month period.
These client losses represent a major hit to Bakkt’s revenue streams. The two companies combined made up key portions of the firm’s income across its loyalty and cryptocurrency service divisions.
Delayed Annual Report
Adding to investor concerns, Bakkt has delayed filing its 2024 annual report with the SEC. The company has requested an extension of time to complete this filing.
Bakkt also postponed its previously announced earnings conference call twice. The call is now scheduled for March 19, after being rescheduled from an initial March 17 date.
The current stock price marks a dramatic fall from Bakkt’s peak performance. Bakkt is now trading more than 96% below its all-time high of $1,063, which it reached on October 29, 2021, shortly after going public through a merger with VPC Impact Acquisition Holdings.
Bakkt was founded in 2018 by the Intercontinental Exchange, which maintains a 55% stake in the company. Intercontinental Exchange also owns the New York Stock Exchange.
The recent setbacks follow earlier reports of potential corporate restructuring. In June, according to Bloomberg, Bakkt’s parent company had considered selling the firm or breaking it into smaller entities.
In November 2023, Bakkt’s share price temporarily surged after reports claimed that Donald Trump’s media company was in advanced talks to acquire the firm. The stock jumped over 162% to $29.71 at that time.
Legal Troubles?
Legal troubles may also be on the horizon for Bakkt. At least one law firm, the Law Offices of Howard G. Smith, has announced a possible class action lawsuit against the company.
The potential lawsuit alleges federal securities violations, claiming that the terminated agreements with Bank of America and Webull, combined with the delayed earnings calls, caused Bakkt’s stock price to fall and injured investors.
The company has also faced compliance issues with the NYSE. In March, Bakkt received a notification that it wasn’t in compliance with the stock exchange’s listing rules after its stock spent 30 days closing below $1 on average.
Bakkt, Bank of America, and Webull did not immediately respond to requests for comment from various news outlets reporting on the story.
The crypto firm’s next steps will likely be outlined during its rescheduled earnings call on March 19, as investors and market watchers await more information about the company’s plans to address these recent challenges.
