Former U.S. Senator Kelly Loeffler, who was previously chief executive officer of the Bitcoin trading platform Bakkt, is engaged in discussions with Trump Media and Technology Group (TMTG) to merge the company’s platform with theirs. The Financial Times reported that the deal is an all-stock transaction that would represent the largest expansion yet outside its social media network, Truth Social.
Bakkt would be TMTG’s first major foray into the cryptocurrency and financial technology space, which would divert attention from its social media operations. That would mark a shift for TMTG, as the firm has been pretty narrow in its focus since inception with Truth Social. The merger may, however, create a means through which TMTG expands its scope of business and enters into the fast-emerging crypto market.
After news of the talks, shares for both TMTG and Bakkt surged in value. Bakkt’s stock rose by 163%, while TMTG’s shares increased by 16%. In after-hours trading, Bakkt’s stock continued trending upwards, with a rise of an additional 17%, whereas shares for TMTG fell down by 3.5% in after-hours trading.
Bakkt’s Struggles and Potential Sale
Bakkt, launched in 2018 by Intercontinental Exchange (ICE), the same company that controls the New York Stock Exchange (NYSE), has been financially struggling. ICE controls about 55% of Bakkt, which has a market capitalization of around $150 million. Back in February, Bakkt issued a “going concern” warning, saying it might not have the money to carry on the business. The firm also ran the risk of delisting from the NYSE as its stock price dropped below the threshold of $1 for 30 continuous days.
This has been a company that was originally launched to a great fanfare with plenty of investments from the likes of Microsoft, Starbucks, and BCG. As the market matured, competition from the more established players was mounting against this platform, and hence things had turned tough for Bakkt. Hence, the firm was looking for some strategic alternatives in the form of sale or breakup. Now, in its place, it seems that TMTG is setting the platform for its purchase.
TMTG’s Financial Challenges
TMTG has also suffered under its own financial handicaps. Since listing itself on the public market in March, the company has yet to turn a profit and has reported severe losses. Still, TMTG continues to be one of the most highly traded stocks on the market. This has led many to conjecture that the overall stock value is being influenced more by meme stock traders than the actual performance of the business.
Though the company has not been able to create a significant amount of revenue, the prospective acquisition of Bakkt might be a way for TMTG to diversify. As more and more people get involved in the crypto market, acquisition can help Trump Media gain access to more streams of revenue and, in turn, further strengthen its financial position.
Kelly Loeffler, a former Bakkt CEO, is currently playing a central role in negotiations between TMTG and Bakkt. As a previous U.S. senator for the state of Georgia, Loeffler chairs Trump’s inaugural committee and remains closely associated with the crypto space. Her role in the launch of Bakkt and her efforts to accelerate adoption of crypto in institutional investing make her a key player in ongoing discussions. Loeffler’s husband, Jeffrey Sprecher, is the CEO of ICE and has been advocating for years to add cryptocurrencies to institutional investment accounts, including retirement programs like 401(k)s and IRAs.
Trump’s Expanding Interests in Crypto
It would not be the first foray in the crypto world that Trump has undertaken to make this deal a reality. In September, decentralized finance platform World Liberty Financial, founded by the Trump family, launched its version of crypto borrowing and lending services, with no intermediation of financial institutions involved in the deals. The firm also aimed at releasing its own token, where 75% of it is going to the Trump family and 25% to their business partners.
It is not going to be the Trump administration’s first foray into the crypto world that will finally make this deal a reality. As early as September, World Liberty Financial, founded by the Trump family, began its own version of crypto borrowing and lending services with no intermediation involvement of financial institutions in deals. The other aim was to release its own token, where 75% of it will be going into the Trump family and 25% into their business partners.
