Recent reports indicate that Donald Trump’s media company, Trump Media and Technology Group (TMTG), is nearing a significant acquisition of Bakkt, a cryptocurrency trading platform owned by Intercontinental Exchange (ICE). As outlined by the Financial Times on November 18, the arrangement is poised to be an all-share transaction, highlighting TMTG’s strategy to envelop itself within the burgeoning cryptocurrency sector. This strategic pivot is not merely a trend but a calculated approach to diversify the company’s portfolio amid the rapidly evolving digital landscape.
Following the news, Bakkt’s share price experienced a substantial spike of around 165%, climbing to $29 as per CryptoSlate data. This market reaction underscores the investors’ optimism surrounding TMTG’s potential move, indicative of a larger bullish sentiment toward cryptocurrency platforms. TMTG, which is the parent of the social media platform Truth Social, has demonstrated volatility and active trading, primarily driven by political waves and Trump’s influential persona. Despite generating a modest revenue of $2.6 million this year, TMTG has managed to secure an astonishing equity valuation of $6 billion, raising questions about its financial viability and future growth prospects.
However, the acquisition isn’t without its challenges. The deal reportedly excludes Bakkt’s crypto custody business, which has faced hurdles in gaining traction and profitability. The custody segment has generated only $328,000 in revenues while raking in operating losses of $27,000 during the third quarter of 2023. This lack of profitability raises concerns regarding the intrinsic value Bakkt would add to TMTG, particularly as the company narrowly evaded delisting from the New York Stock Exchange earlier this year through a reverse stock split.
The question remains: Can TMTG capitalize on Bakkt’s current assets and potential market positioning to ensure profitability? TMTG’s acquisition of a platform aimed squarely at institutional investors could strategically benefit its entry into a relatively niche yet lucrative market, reinforcing its desire to tap into new revenue streams that the digital currency landscape offers.
A Broader Context: TMTG’s Crypto Aspirations
Furthermore, this acquisition aligns with Trump’s growing engagement in the cryptocurrency domain. TMTG aims to leverage its existing ventures, such as World Liberty Financial, a stablecoin-focused credit service, to broaden its influence. This synergy could offer TMTG a comprehensive pathway to becoming a formidable player in the crypto arena—should they manage to navigate the complexities of this volatile market successfully.
However, skepticism remains. ICE and Bakkt have refrained from commenting on the acquisition discussions, leaving room for uncertainty regarding the outcome. As this transaction unfolds, it will be critical to observe how well TMTG maneuvers through the hurdles and opportunities posed by the crypto marketplace, potentially reshaping its corporate narrative in the process.