Is Trump Media Building a Crypto Empire with Bakkt Acquisition in All-Stock Deal?

Trump Media Shares Surge Following Bakkt Acquisition Talks

Trump Media and Technology Group, the company behind Truth Social, saw its shares rise sharply on Monday after reports emerged suggesting the company is in talks to acquire Bakkt, a cryptocurrency trading firm.

According to the Financial Times, which cited two sources familiar with the negotiations, the deal would be an all-stock acquisition, with Bakkt’s valuation standing at US$155 million (S$207.5 million) as of 15 November.

Bakkt's Stock Soars Amid Volatility

The news of the potential acquisition sent Bakkt's stock price skyrocketing by 163%, triggering multiple trading halts due to extreme volatility, reaching US$29.71 on 18 November.

Trump Media’s share, in which Donald Trump holds more than half of the stake, also saw a 16.7% increase in its share price, closing at US$32.78 on Nov 18.

Bakkt, originally launched by Intercontinental Exchange (ICE) in 2018, remains majority-owned by ICE, the parent company of the New York Stock Exchange (NYSE).

It has been working to establish itself in the competitive crypto market.

In October 2021, Bakkt's stock peaked above US$1,000, driven by soaring cryptocurrency prices.

However, just under three years later, the exchange warned it might struggle to remain operational, with the potential risk of being delisted from the NYSE.

Bakkt’s founding CEO, Kelly Loeffler (left), is married to Jeffrey Sprecher (right), the founder and CEO of Intercontinental Exchange (ICE) and chair of the NYSE.

Trump Media Struggles With Profitability

While Trump Media's stock performance has helped the company maintain a market valuation exceeding $7 billion, it continues to face significant financial hurdles.

In its third-quarter earnings report earlier this month, Trump Media disclosed a net loss of $19 million, alongside just $1 million in revenue.

However, the company holds a substantial cash reserve of nearly $673 million in cash equivalents and short-term investments as of 30 September 2024.

Critics Doubt Trump's Media Strategy

Despite the high valuation, critics remain sceptical about Trump Media's ability to turn a profit.

Jay Ritter, a finance professor at the University of Florida, offered a blunt assessment, stating,

"The only thing Trump Media has demonstrated they're good at is selling overvalued equity. Now, they've got this big stockpile of cash, and they're going to buy an operating business that hopefully will be able to generate revenue and profit."

A Bid for Influence or Monopoly?

Is this a calculated move to centralise control over emerging industries and sway the US market under Trump's influence?

The possible acquisition of Bakkt would mark a further step in Trump Media’s growing involvement in the cryptocurrency space.

Trump has long championed the crypto industry, which gained traction among his supporters during his presidential campaign.

In addition to the Bakkt deal, Trump has also launched his own crypto venture, World Liberty Financial.

Interestingly, founder and CEO of ICE, Jeffrey Loeffler, who briefly served as a US Senator for Georgia, now co-chairs Donald Trump’s inaugural committee alongside Steve Witkoff.

By tying his name to cryptocurrency and consolidating power through acquisitions, Trump could be positioning himself as a dominant force in tech and finance, pulling followers deeper into his orbit.

Crypto Space Faces Competition Despite Optimism

While the crypto market is crowded with players, some investors are optimistic about the deal’s potential.

Tuttle Capital Management CEO Matthew Tuttle acknowledged the competitive nature of the crypto space but noted,

"The market likes what they see so far in the potential Trump Media deal."

Georgetown University finance professor Jim Angel also weighed in on the situation, stating,

"The only thing (Trump Media has) got going for them is the incoming president’s name. But the crypto crowd has backed the president quite strongly, and now they’re expecting a payoff."

At the time of writing, a poll on Polymarket shows that 65% of participants express optimism about the potential acquisition of a crypto exchange.