Author: Bit BitpushNews
As he prepares to take over the White House in January 2025, Trump continues to expand the new landscape of the cryptocurrency field.
According to a report in the Financial Times, Donald Trump's social media company Trump Media & Technology Group is in advanced negotiations to acquire the cryptocurrency trading platform Bakkt.
According to two people familiar with the negotiations, Trump Media will acquire Bakkt outright, with Trump promising to retain a 53% stake, although the valuation and financial terms have not been disclosed.
The news caused the stock prices of both companies to soar.
Trump Media (Nasdaq stock code DJT), in which Trump holds a majority stake, surged by double digits just minutes after the report was published. The company operates the Truth Social app and closed up over 16%. Bakkt experienced multiple trading halts due to volatility and closed up over 163%.
Mediocre performance, once on the verge of delisting
Bakkt, launched by Intercontinental Exchange (ICE) in 2018, went public in October 2021 and provides technology services for cryptocurrency investors. Prior to going public through a SPAC, Bakkt had raised hundreds of millions of dollars from investors such as Boston Consulting Group, Galaxy Digital, ICE, and Microsoft's M12 venture fund, but has struggled to turn a profit, with its latest quarterly report showing total revenue of $32.84 million and an operating loss of $27.4 million, a 48% reduction in losses year-over-year.
Trump's relationship with Bakkt is quite extraordinary, as Bakkt's former CEO Kelly Loeffler was a co-chair of Trump's inauguration committee.
Loeffler's husband is Intercontinental Exchange CEO Jeffrey Sprecher. In 2019, Georgia Governor Brian Kemp appointed Loeffler to fill the Senate seat vacated by Senator Johnny Isakson due to health reasons, and Loeffler subsequently resigned from her executive role at Bakkt. However, in the runoff for the special Senate election, Loeffler was defeated by Democratic Senator Raphael Warnock.
Bakkt had previously stated that its cryptocurrency custody business might be shut down, although it had obtained regulatory approval from New York authorities. Individuals familiar with the TMTG negotiations indicate that this business will not be included in the transaction. In the three months ending September 30, the custody business had an operating loss of $27,000 and revenue of $328,000.
Due to its depressed stock price, Bakkt had faced the risk of being delisted from the New York Stock Exchange until it conducted a 1-for-25 reverse stock split in April. Last week, its stock price rose 15%.
Expanding business landscape, stock performance greater than fundamentals?
The Trump family's foray into the cryptocurrency market is accelerating. The cryptocurrency project World Liberty Financial launched in September, along with Trump's various campaign promises related to digital assets (such as establishing a Bitcoin reserve, creating a mining-friendly environment, and replacing the SEC chair), all demonstrate Trump's strong interest in the cryptocurrency industry.
This interest is directly reflected in the market. With Trump's election victory, retail investors' expectations for the Republican party and optimism about the potential for crypto-friendly policies under a Trump administration have caused significant volatility in the stock price of TMTG, the parent company of Trump's social media platform Truth Social. The stock price fluctuated by billions of dollars in the run-up to the election, and TMTG has become one of the most actively traded US stocks. However, TMTG's revenue this year was only $2.6 million, with a net loss of $363 million, yet its market capitalization exceeds $7 billion.
The user base of Truth Social is also relatively small, with data from Similarweb showing the website had an average daily visit of 646,000 this month, compared to 155 million daily visits for Musk's X platform.
