Bitcoin treasury firm Bakkt plunges 40% after selling its loyalty business

After a full Bitcoin treasury pivot, Bakkt Holdings’ lowball $75 million stock offering caused the stock to plunge in premarket trading. 

Summary

• Bakkt Holdings plans to issue $75M shares
• Lowball share offering caused its share price to nosedive
• The firm fully divested from its loyalty business

For exchange-listed companies, crypto treasury pivots are usually designed to increase their stock valuations. However, this doesn’t always pan out as expected, as in the case of Bakkt Holdings, which recently fully pivoted to a Bitcoin (BTC) treasury strategy. On Tuesday, July 29, the company’s stock plunged over 40%, largely due to its lowball stock offering.

Specifically, the firm announced plans to raise $75 million through a stock offering and pre-funded warrants. The firm plans to issue 6,753,627 shares of Class A common stock and pre-funded warrants for up to 746,373 shares. Common stock will be priced at $10 per share and warrants at $9.9999.

This decision came despite the fact that, at the time of the announcement, the company’s shares were trading at $17 per share. Soon after the stock offering announcement, Bakkt’s shares fell to $10.09 due to concerns about its strategic pivot to Bitcoin.

Bakkt Holdings goes full in on Bitcoin

On July 28, Bakkt Holdings sold its loyalty business, previously a core of its operations, to a subsidiary of Roman DBDR for $11 million in cash. According to the firm’s CEO, Andy Main, this sale was part of its strategy to pivot to a “pure-play crypto infrastructure company.”

This is part of its broader strategy to raise up to $1 billion, largely to invest in its Bitcoin treasury through both stock issuance and warrants. In addition to its Bitcoin treasuries, Bakkt plans to invest in digital asset technology. The firm plans to offer Bitcoin custody services, facilitate stablecoin payments, enable digital asset trading, and provide various other services for institutional clients.