Summary Bakkt is rated neutral, with shares appearing fully valued after a volatile period and recent 48% surge. BKKT's transformation into a pure-play digital asset infrastructure business is promising, but execution risk should not be underestimated. Loss of Webull, which accounted for 74% of revenue, and loyalty business exit have improved revenue quality. A lot has changed since my latest coverage of Bakkt Holdings, Inc. ( BKKT ) almost two years ago in February 2024, when I rated the stock a buy. A noticeable change would be the reverse stock split taking place just a few months after my coverage, making BKKT trade at around $38 per share post-split, as opposed to $1.54 per share. This means my 1-year target price of $12 would also adjust to $292 per share, proving my call wrong. Across the rest of 2024 and 2025, I would categorize BKKT’s share performance as highly volatile. It appears that the potential macro catalyst I highlighted in my earlier coverage, while it did have a positive effect on BKKT's share price, was not enough to help BKKT reach my target price. The catalyst I highlighted was a potential bitcoin bull run post-halving that could drive BKKT’s share performance that I predicted to happen sometime towards the end of 2024, consistent with the earlier patterns, such as in 2016 and 2020. While it was true that bitcoin reached a temporary all-time high in December 2024 and positively drove BKKT’s share price, share price was already down so much post-split throughout 2024 to around low teens on average, making it an uphill battle for BAKKT. I re-rated BKKT to neutral. At the current price level, BKKT appears fully valued despite the improving fundamentals and compelling growth story into 2026. Financials From a financial perspective, the major changes that have taken place since my last coverage would include the revenue omission from loyalty business, which was sold for $11 million in 2025. However, the most major change as per today would be the termination of commercial relationship with Webull in mid of 2025, which drove almost 74% of BKKT’s revenue. In my view, while BKKT’s financials have been significantly impacted by these two events, the longer-term impact should be relatively positive. First off, the revenue concentration issue should no longer be a point of concern going forward. Secondly, BKKT’s loyalty exit reduces distraction in BKKT’s transformational shift towards a pure-play digital asset infrastructure business. As of Q3 2025, I would rate BKKT’s top-line performance as relatively decent and progressing. Despite losing 74% of its revenue, revenue saw a solid growth YoY in Q3. More importantly, with the revenue generation now fully driven by the crypto services business, the perceived quality of the revenue is also better YoY, in my opinion. Q3 revenue was $402 million, an over 27% YoY growth compared to $316.3 million in Q3, 2024. BKKT 10-Q Profitability-wise, BKKT has improved despite still realizing GAAP net losses, which was merely driven by an excessive non-cash charge due to the change of fair value in warrant liability. One thing to note here is that adjusted EBITDA not only turned positive but also reached a meaningful figure. In Q3, adjusted EBITDA was $28.7 million. At the same time last year, BKKT still realized an adjusted EBITDA loss of -$20.1 million. BKKT 10-Q Excluding the $37.2 million non-cash charge, lower SG&A expenses, which was down 59% YoY in Q3, has been helpful in driving improved profitability of BKKT. Furthermore, when we zoom out a bit into the last nine months, SG&A expenses have consistently declined significantly as well. In the end, BKKT seemed to have done relatively well here, suggesting that the transformation is slowly but surely working. If there were any possible areas of concern, I believe it may have been the liquidity and cash-flow generation. As of Q3, BKKT remains a cash-burning operation with high dependency on financing cash flow to sustain its business. Nonetheless, they come with asterisks too. Q3 presentation One positive note is that BKKT has been able to maintain its debt-free status as of Q3. BKKT ended Q3 with $64.4 million in cash and equivalents and with a cleaner balance sheet, after its recent elimination of the Up-C structure. BKKT also successfully raised $100 million in new funding in Q3. Another positive sign is that the main driver for the widened operating cash flow (OCF) loss in the last nine months ending Q3 was merely a one-off case, which was the over $77 million decrease in customer funds associated with the Webull trading activities. As such, OCF may continue its progress towards neutral or positive into FY 2026, supported by the stronger adjusted EBITDA in Q3. Catalyst A few things could be contributors to potential positive re-rating, in my view. In a nutshell, BKKT appears to have a compelling offering to address the demand in the growing stablecoin and bitcoin treasury strategy markets. Q3 presentation With the revenue generation of the new product simply driven by crypto and stablecoin volume, it is also simpler for investors to understand the trajectory of BKKT’s business in line with the enterprise tokenization and bitcoin treasury adoption in 2026 and beyond. RWA.xyz/stablecoins I believe the important piece to product adoption is really the growing demand. Just looking at the stablecoin growth on YoY basis, settlement volume has almost doubled from $30 trillion in 2024 to $57 trillion last year alone, suggesting there is still plenty of upside here. In addition, I also expect bitcoin treasury strategy to continue growing in popularity among public companies, driving adoption for BKKT’s institutional custody and execution services through its partnership with its parent company, ICE. Risk All in all, BKKT’s complete transformation into what it is today is still only the beginning, in my view. While some of the things we have seen look good on paper, it still requires a strong execution in an increasingly competitive market to drive market confidence. As such, despite all of the other possible risk factors, I believe the execution lag with its new product could be a major risk factor that could derail BKKT from having a strong 2026. The AI-powered treasury infrastructure, for instance, may struggle to achieve product-market fit, resulting in such a lag, given the competition from companies like Stripe or PayPal. Another downside driver, in my view, would be a potential crypto winter. Though my prediction in my latest coverage about halving cycles was proven inaccurate, historically, crypto markets see a drawdown in the third year post halving following a possible peak in the previous year. This suggests that 2026 could be a challenging year for crypto. Valuation/Pricing My 1-year target price for BKKT is driven by the following assumptions for the bull vs. bear scenarios, using a combination of consensus estimates and my own analysis: Bull scenario (50% probability) assumptions - BKKT achieves an infrastructure pure-play transformation, marked by its success in onboarding enterprise clients with a potential to replace its loss in revenue from Webull churn. BKKT maintains positive trends in profitability. At 0.4x P/S, multiples should see a meaningful enough expansion to reflect things I mentioned above. BKKT last saw 0.4x P/S sometimes in mid-2023, before it continued its downtrend to a relatively depressed level today. Bear scenario (50% probability) assumptions - BKKT sees an execution lag where it struggles to onboard new enterprise clients. There is also the potential crypto winter in 2026. I would expect P/S multiple to improve from today’s relatively depressed level to reflect the overall narrative of pure-play digital infrastructure transformation, yet at 0.1x, it still does not capture the successful execution of it. Own Analysis Consolidating all the information above into my model, I arrived at an FY 2026 weighted target price of $16.7 per share, suggesting around 8% from the current price level. I give the stock a neutral rating. Conclusion My view is that BKKT has transitioned from a speculative turnaround in my first coverage to some growth story that could be promising. With the stock currently trading around $15.5 per share, it seems it has been moving towards the 1-year price target earlier than expected due to over 48% surge in over the past five days. I suspect this to be a possible side effect of an uptick in the bitcoin market within the same period. While in absence of that I would overall rate the stock a buy due to interesting developments on the product side and also attractive bitcoin treasury and stablecoin market, the current neutral stance merely suggests that today is not the right time to enter BKKT, and that interested investors should continue to monitor price movements in the next few quarters.
