Bakkt Joins Market Mania But Remains In Cash Burn Reality

Summary Bakkt is undergoing a strategic transformation, divesting legacy businesses and focusing on crypto services, stablecoin payments, and Bitcoin treasury initiatives. BKKT's second-quarter revenue rose 13% year-over-year, but core operations remain unprofitable, with net losses and negative free cash flow still ￰0￱ asset sales and equity raises have improved liquidity, while new leadership and board appointments have sparked renewed market ￰1￱ ongoing operational shifts and improved fundamentals, I rate BKKT as a hold, pending proof that its transformation will curb cash burn and sustain liquidity. I've been bearish on Bakkt Holdings, Inc.

( BKKT ) on the back of what's been consistent quarters of net losses, negative free cash flow ("FCF'), and a declining liquidity balance against its crypto operations that have not had a healthy stock market fit. However, in a new market zeitgeist where fundamentals seem to be simply suggestions to be replaced by vibes, BKKT has seen its common equity rally heavily in response to a deluge of positive ￰2￱ ticker is set to expand its board with the addition of Mike Alfred, an IREN Limited ( IREN ) board member and founder of Alpine Fox, a bitcoin-focused private investment ￰3￱ owns and operates data centers for AI and mines Bitcoin ("BTC"). The stock rallied heavily on the news, moving to a more than 3-year high, perhaps with the view being that the addition of a new board member will be able to help reverse years of operational decline and compounding ￰4￱ by YCharts Akshay Naheta, who joined BKKT in March as co-CEO, was also named sole CEO and ￰5￱ was previously a senior executive at SoftBank Group ( OTCPK:SFTBY ), leading on the company's public equity investments and working on some large tentpole deals, including an investment in Nvidia ( NVDA ) when he joined the Tokyo-based multinational investment company in 2017, before leaving in 2021 to create Distributed Technologies ￰6￱ joined BKKT earlier this ￰7￱ reported fiscal 2025 second-quarter revenue of $577.88 million , up 13% over its year-ago ￰8￱ operating expenses expanded by 12% year-over-year to come in at $596.37 ￰9￱ would be right to highlight that this still drove a net loss of $14.7 million that was lower than the year-ago figure, with negative EPS down by 51 cents year-over-year.

BKKT's trailing twelve-month FCF position is still negative, but the company is seeing an ￰10￱ Holdings Fiscal 2025 Second Quarter Form 10-Q Free Cash Flow, Liquidity, And New Operations BKKT's second-quarter results are in some ways legacy ￰11￱ company is going through a metamorphosis, divesting its loyalty business for $11 million in a definitive agreement set to close in the third quarter. Critically, the loyalty business, while broadly higher margin than BKKT's core crypto services revenue, was seeing year-over-year declines in ￰12￱ for the segment during the second quarter dipped by 23% over its year-ago ￰13￱ money from the sale should help bolster a cash, cash equivalents, and restricted cash position, which stood at $61.45 million as of the end of the second ￰14￱ by YCharts BKKT also completed the sale of Bakkt Trust to Intercontinental Exchange ( ICE ) for proceeds of around $4.5 million, generating a loss on the sale of around $2.3 ￰15￱ firm in transition also sold 6.75 million of its common shares and warrants post-period end in July to raise $75 million to further develop its BTC as a treasury ￰16￱ sales were of immaterial operations, and BKKT's highly unprofitable core crypto services business will remain the primary driver of its ￰17￱ Holdings Fiscal 2025 Second Quarter Presentation Bakkt Holdings Fiscal 2025 Second Quarter Management communicated during the second quarter earnings call that their strategy will hinge on three pillars: (1) Brokerage-in-a-box; (2) Stablecoin payments; and (3) Bitcoin as a ￰18￱ acquired the domain name ("bitcoin.

co. jp") last week in a move management stated will help build the third ￰19￱ issuing a business wire for a domain name seems unnecessary, BKKT wants to signal to the market that it's a different ￰20￱ has underpinned the shift in vibes for a ticker that once had to engineer a 1-for-25 reverse stock split and whose liquidity has been weighed down by back-to-back quarters of negative ￰21￱ by YCharts FCF also seems to be on an upswing, which, when aggregated with the recent asset sales, does provide a healthier fundamental backdrop for ￰22￱ seem to be ignoring the dilution for now, with the BKKT also recently redeeming a $25 million outstanding 0.00% convertible debenture due June 18, ￰23￱ always held little debt, with the recent move helping plump up ￰24￱ primary risk continues to coalesce around the direction of FCF and just how deep a cash runway the equity offering, existing cash position, and the proceeds from the sale of the loyalty business will ￰25￱ Do I still think BKKT is a sell?

This isn't ￰26￱ ongoing rally could have some ￰27￱ CEO will have to prove to the market that the transformation can stem historical cash burn and maintain healthy liquidity ￰28￱ in BTC as part of a corporate treasury strategy only works until the market tips back bearish and focus again shifts to underlying fundamentals. I'm rating BKKT as a hold against the clearer shift in operations.