Bakkt Is a Worthy Crypto-Centric Holding, but Watch for Bottom-Line Results

Cryptocurrency and the blockchain are quickly gaining acceptance on Wall Street in the 2020's. If you need proof of this, take a look at Bakkt < NYSE:BKKT> as the company is evolving and many BKKT stock traders are enjoying substantial gains.

Indeed, Bakkt just revealed a deal with one of the world's biggest and most famous credit-card companies. It's a major coup for Bakkt, and for the crypto community in general.

Yet, even as this partnership could extend Bakkt’s crypto-loyalty services to millions of customers, BKKT isn't a perfect investment.

The company recently disclosed its fiscal data, and it's a "good news, bad news" type of situation. As an informed investor, you can celebrate the positive stats, but you'll definitely want to acknowledge the negative ones as well.

Just to recap, Bakkt went public via a special purpose acquisition company (SPAC) merger with VPC Impact Acquisition Holdings.

The share price was originally set at $10. However, BKKT stock wasn't a big hit on Wall Street apparently, as it declined to $8.75 by the end of its first day of trading on Oct. 18.

This must have been disappointing for early investors, as cryptocurrency prices were generally trending upwards at that time.

However, that's just the beginning of the story. Over the ensuing days, the Bakkt share price rallied hard, peaking at $50.80 on Nov. 1.

Folks who chased BKKT stock near the top were promptly punished, though, as the share was halved to $25 by Nov. 11.

Clearly, this is a volatile stock, not unlike many crypto-related assets out there.

So, please be cautious and keep your position sizes small at all times.

The billion-dollar question, at this point, would be: will BKKT stock return to $50?

If any event should push the stock back to its peak price, it's a major deal with a financial giant.

I'm referring to Bakkt's headline-grabbing agreement with Mastercard < NYSE:MA>.

InvestorPlace contributor William White served up a scoop of potentially game-changing news as Mastercard offered its network to users of Bakkt's cryptocurrency exchange and wallets.

This should make it easier for cryptocurrency holders to make use of their digital assets as part of everyday life.

In other words, it will be more convenient for shoppers to buy and purchase goods and services with crypto.

Moreover, this arrangement will enable some retailers to accept cryptocurrency payments through Mastercard.

Not long ago, Bakkt provided more details on how the partnership will work:

"Banks will be able to issue their own branded crypto-linked debit/credit card and consumers will be able to buy, sell and hold digital assets in Bakkt custodial wallets. Mastercard and Bakkt will explore opportunities to create fungibility between loyalty points, crypto and other digital assets."

As White pointed out, the Mastercard-Bakkt collaboration will encourage more customers to get into the crypto game.

It's a win-win for all of the stakeholders, no doubt.

Still, informed investors should also make sure that Bakkt is on solid financial ground before considering a position.

As it turns out, the company's third-quarter 2021 fiscal results are less than ideal.

CEO Gavin Michael asserted that Bakkt "has made tremendous strides," and there may be some data points to support this contention.

In particular, Bakkt's third-quarter 2021 net revenue totaled $9.1 million. That's a 38% increase over the $6.6 million posted in the third quarter of 2020.

Yet, there were some worrisome data points during the quarter, as well:

• $39 million in operating expenses, representing an increase of 60% year-over-year
• Net loss of $28.8 million, which is significantly worse than the net loss of $18 million from the third quarter of 2020
• Adjusted EBITDA (non-GAAP) loss of $24.1 million, versus a loss of $12.3 million in the year-earlier period

It appears that Bakkt needs to contain its expenses, in order to better translate the company's revenues into positive bottom-line results.

So, there's room for improvement on the financial front.

Nevertheless, Bakkt's deal with Mastercard marks a milestone moment for the company, and for the crypto community as a whole.

As for BKKT stock, it should revisit $50 soon enough. Just don't go all in on the shares, as volatility is the norm with everything crypto-related.

The stock market can be unpredictable, volatile, and sometimes totally nonsensical. InvestorPlace.com strives to cut through the noise and bring you information on what matters – and how it impacts your portfolio. We deliver thoughtful coverage on everything from stocks to cryptos to pre-IPO investments. So whether you live and breathe breaking stock news or expect your stocks to pay you, InvestorPlace.com has your back.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content - and crossed the occasional line - on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. 

BKKT shares were trading at $22.45 per share on Monday morning, down $1.82 (-7.50%). Year-to-date, BKKT has gained 122.72%, versus a 26.34% rise in the benchmark S&P 500 index during the same period.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

More...