Trump Media Eyes Crypto Expansion with Potential Bakkt Acquisition

Trump Media and Technology Group (TMTG), known for operating the Truth Social platform, is reportedly in advanced negotiations to purchase the cryptocurrency trading company Bakkt.

The Financial Times broke the news, citing sources familiar with the discussions, and the announcement caused significant stock market reactions.

Shares of Trump Media surged shortly after the report, closing over 16% higher. Bakkt, established by Intercontinental Exchange (ICE)—the parent company of the New York Stock Exchange—experienced even greater gains. Its stock price soared by more than 162%, prompting several trading halts due to market volatility.

TMTG, primarily owned by President-elect Donald Trump, has drawn attention in recent months as investors speculate about its potential growth ahead of the 2024 presidential election. Bakkt, meanwhile, has faced ongoing financial difficulties, adding intrigue to the possible acquisition.

Stock Market Reactions and Key Figures

Trump Media’s performance on the Nasdaq, where it trades under the ticker DJT, reflected renewed investor confidence following the acquisition rumors. Bakkt’s market capitalization jumped significantly in response to the news.

Notably, Kelly Loeffler, a former CEO of Bakkt, has connections to both parties. Loeffler stepped down from her role at Bakkt in 2019 to accept an appointment to the U.S. Senate from Georgia Governor Brian Kemp. She later lost her Senate seat in a runoff election to Democrat Raphael Warnock. Loeffler’s ties to Bakkt and her past involvement with Trump’s inauguration committee have added context to the unfolding developments.

Trump Media’s Crypto Strategy

This potential acquisition reflects Trump Media’s increasing interest in cryptocurrency markets. Despite reporting a $363 million net loss on revenue of just $2.6 million this year, TMTG boasts a market capitalization exceeding $7 billion, largely driven by retail investor enthusiasm.

The company also reported holding $673 million in cash and cash equivalents in its most recent earnings statement.

TMTG’s engagement with cryptocurrency isn’t new. In the weeks leading up to the November presidential election, Trump introduced a cryptocurrency project called World Liberty Financial (WLF). Under the terms of this venture, Trump and his family stand to collect 75% of the net revenue generated by the project’s tokens without assuming liability.

If successful, acquiring Bakkt would position TMTG to further solidify its foothold in the growing crypto sector while aligning with Trump’s broader business interests.

Bakkt’s Journey and Financial Struggles

Bakkt was launched in 2018 by ICE with a vision to revolutionize cryptocurrency adoption. Initially, the company focused on enabling Bitcoin transactions for everyday purchases, including a notable partnership with Starbucks.

However, these plans evolved over time, and Bakkt eventually pivoted to offer crypto custody and trading services.

Despite its early promise, Bakkt has struggled financially. The company reported $328.4 million in revenue during its most recent fiscal quarter but incurred a $27.4 million operating loss.

Although this marks a 48% improvement compared to the prior year, Bakkt acknowledged concerns about its long-term financial viability.

In March, Bakkt received a warning from the New York Stock Exchange after its stock price traded below $1 per share for an extended period. To address the issue, Bakkt executed a 1-for-25 reverse stock split in April, temporarily stabilizing its share price.

The company’s quarterly report stated that while it currently has sufficient capital to operate for at least 12 months, this outlook could change. Bakkt admitted that if its financial situation worsens, shareholders could face significant losses.

Potential Impact of the Acquisition

The reported deal between Trump Media and Bakkt, expected to be an all-stock transaction, could reshape Bakkt’s trajectory. The acquisition would integrate Bakkt into TMTG’s operations, potentially bolstering its presence in cryptocurrency markets.

However, Bakkt’s crypto custody business, which manages assets like Bitcoin and Ethereum, is reportedly excluded from the acquisition. This exclusion suggests that the focus will remain on trading and other areas of Bakkt’s expertise.

The timing of the potential acquisition is significant, as Bitcoin prices have risen by over 30% in recent weeks, driven by renewed market enthusiasm. Trump Media’s move aligns with broader trends in the cryptocurrency sector and may serve to capitalize on the growing momentum.