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Bakkt Holdings Inc. (NYSE: BKKT) stock got a boost of 234% last week after Mastercard Inc. (NYSE: MA) announced it's teaming up with the firm. This comes after BKKT went public on Oct. 18 via SPAC (special purpose acquisition company) and fell short of its expected IPO price of $10 on the first day. So, the question is: Will the Bakkt stock price continue to go up?
The partnership makes it possible for thousands of banks and millions of merchants on its payment network to integrate cryptocurrency into their products and allows consumers to use them for purchases. This includes bitcoin wallets, credit and debit cards that earn rewards in crypto and enable digital assets to be spent. Even loyalty programs like airline and hotel points can be converted into Bitcoin.
Bakkt will be the provider of protective and allocation services for those who sign up.
The firm hopes to one day rival the likes of Robinhood Markets Inc. (NASDAQ: HOOD) and Coinbase Global Inc. (NASDAQ: COIN). This major partnership is a huge step towards its goal.
What Is Bakkt?
Bakkt is a crypto trading platform recently spun off from New York Stock Exchange (NYSE) parent Intercontinental Exchange (ICE). Founded by the current CEO of ICE, Jeffery Sprecher, and his wife Kelly Loeffler, its original purpose was to serve as a platform for investors to execute trades in the crypto market.
Loeffler and Sprecher hoped the platform would attract more mainstream investors and increase trust in the digital currency market. They set out to change the minds of institutional investors who believed crypto was just hype or tied to criminal activity.
However, their vision grew and evolved as the market exploded. That led Bakkt to grow into what it is today - a digital wallet that enables consumers to buy, sell, and spend their cryptos along with their hotel, airline, and credit card points. It also facilitates payments for merchants who want to enable their customers to use cryptos rather than holding on to them as investments.
Bakkt uses the latest in cloud technologies to process transactions in real time. This is what makes it possible to use crypto as a transaction currency. It's all part of the firm's goal to innovate the future of commerce by reimagining the digital asset ecosystem.
In order to stay relevant in the ever-changing crypto climate, its platform is designed to be scalable and agile enough to quickly support additional digital assets. As it's evolved, the platform has added Venmo-like payment services that most exchanges, like Robinhood and Coinbase, lack. There are countless ways investors can buy and trade cryptos, but very few offer so many different options all in one app.
What started as an exchange for crypto derivatives expanded to include more diverse features for digital currency investors. It offers the safety and trust of well-known names in traditional finance to draw more of the public into the crypto sphere.
And the recent partnership with Mastercard pushes Bakkt further into the public's eye.
Bakkt and Mastercard Partnership
Bakkt and Mastercard's partnership is groundbreaking for both sides. Bakkt extends Mastercard's ecosystem of cryptocurrency partners by providing quick access to crypto capabilities. And Bakkt has direct involvement in the ways that cryptos are more publicly used as currency.
Sherri Hammond, Executive Vice President of Digital Partnerships at Mastercard, said, "Together with Bakkt and grounded by our principled approach to innovation, we'll not only empower our partners to offer a dynamic mix of digital assets options, but also deliver differentiated and relevant consumer experiences."
Bakkt is able to bring its secure platform to a major trusted financial institution; Mastercard is able to bring something to its customers and vendors born out of one of the most trusted financial institutions in the world. Both parties are helping to change the notion that cryptos are not just investments, but real currency that can be used the same way the fiat currencies are. And it's likely to bring more attention to cryptos, which could benefit Bitcoin and other cryptos going mainstream in the future.
It's a win-win partnership.
Mastercard is able to keep customers on its own platforms rather than seeing dollars from their accounts transferred to other crypto exchanges. All the while, Bakkt continues to lower the barrier of entry into the crypto world for the public and institutions alike.
So, where will this push the Bakkt stock price in the years to come?
Bakkt Stock Forecast
It's important to keep in mind that Bakkt generates most of its revenue in two ways.
The first is that it takes a 2% cut of each transaction fee. The second is that Bakkt earns a 2% spread on each crypto purchase or conversion back to fiat currency. The firm expects 94% of its total earnings to come from crypto trades.
Bakkt thrives off its users completing transactions.
The partnership with Mastercard will drive a ton of traffic to Bakkt. With more than 1.1 billion Mastercards in circulation worldwide, that means more than 1.1 billion potential new users for Bakkt.
Bakkt has also partnered with Fiserv Inc. (NASDAQ: FISV), a company that provides money transfer services to more than 100 million digital banking users worldwide. While this one might not be as notable as Mastercard, it still helps Bakkt to grow the firm's pool of new users.
These two partnerships have boosted Bakkt's 2025 forecast, and for good reason.
While BAKKT expects to serve only 9 million active users by the end of 2021, it expects that figure to more than triple to 31 million by 2025. That means its $889 million in revenue this year should hit $6.6 billion by 2025.
Bakkt has the infrastructure to maintain growth and could turn into a huge win for investors, even if the crypto market is notoriously volatile.
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