Benchmark initiates 'buy' rating for beleaguered crypto infra company Bakkt, citing strategic pivot

Benchmark analyst Mark Palmer has initiated a "buy" rating and $13 price target for crypto infrastructure firm Bakkt (ticker BKKT), arguing the long beleaguered company is due for "a fresh start."

"BKKT is poised for a fresh start after a period of restructuring that has streamlined its focus and reset its growth trajectory," Palmer wrote in a note to clients, noting the firm’s divestiture of its custody business, pending sale of its loyalty points unit, and new leadership under CEO Akshay Naheta.

Bakkt is "refocusing" around three “high-conviction” plays, according to Benchmark — a bitcoin treasury strategy, "brokerage-in-a-box" solution, and a stablecoin payments initiative through a partnership with Distributed Technologies Research.

In July, Bakkt announced it planned to raise $1 billion to fund a bitcoin and wider digital asset treasury play through equity and debt sales. Palmer noted Bakkt also plans to purchase 30% of the outstanding shares of Japan-based MarushoHotta.

The analyst highlighted Bakkt's aggressive approach to acquiring money transmitter licenses, allowing it to facilitate crypto trading, transfers, and settlement in all 50 U.S. states, as well as a New York State Department of Financial Services BitLicense. This supports Bakkt's ability to serve as a "turnkey" operator for banks, broker-dealers, and fintechs looking to move into crypto amid a more permissive administration.

"These embedded distribution partnerships give BKKT scalable growth through a B2B2C model without requiring direct consumer acquisition," Palmer wrote. Meanwhile, Bakkt's "compliant, institutional-grade platform for stablecoin settlement," called Bakkt Agent, is in private beta and expected to roll out to around 90 countries, amid a surge in stablecoin interest.

Bakkt was launched in 2018 with support from NYSE operator Intercontinental Exchange. The Atlanta-based firm has gone through several different strategies over the years, initially focusing on an institutional-grade trading platform for daily physically-settled Bitcoin futures — a product that struggled to get off the ground — before taking a swing at tokenizing rewards points and crypto custody.

The company went public in 2021. Last November, President Donald Trump’s social media company Truth Social intimated that it might acquire the firm.

Citing some risks to its analysis, Benchmark noted Bakkt may not be able to offload its loyalty points operation, as well as other factors like regulatory uncertainty, increasing competition, and general crypto market instability. In March, Bakkt disclosed that its largest client, Webull, representing nearly three-quarters of its revenues, would not renew its contract past June 2025.

BKKT shares traded higher by 6.7% to $9.09 at publication time.