Digital asset platform provider Bakkt Holdings, Inc. (BKKT), which is headquartered in Atlanta. Ga., failed to  generate significant investor interest in its stock market debut on October 18, 2021, after combining with VPC Impact Acquisition Holdings, a special purpose acquisition company (SPAC). Nevertheless, its shares have soared 289.3% in price since its market debut to close Friday’s trading session at $42.52, after hitting its 52-week high of $42.88.

The stock surged more than 100% on October 25 on the news of the company’s partnership with Mastercard Incorporated (MA) and Fiserv, Inc. (FISV). However, the stock  plunged 17% in price on October 26.

SPACs continue to face increased regulatory pressures. Last month, House or Representatives Democrats put forward a proposal that would essentially block investment banks from marketing SPAC deals to retail investors. Also, BKKT faces stiff competition from other established players that offer cryptocurrency trading, so its near-term prospects look uncertain.

Click here to check out our Cryptocurrency Industry Report for 2021

Here are the factors that could shape BKKT’s performance in the coming months:

Extreme Volatility Surrounding Cryptocurrencies

Prices of most cryptocurrencies, especially bitcoin, have increased following the ProShares Trust – ProShares Bitcoin Strategy ETF’s (BITO) launch on October 19. Bitcoin prices exceeded $66,000 last month, rising from below $30,000 in mid-July 2021. According to The U.S. Sun report, published on October 29, investors were warned to avoid investing in Shiba Inu cryptocurrency. So, BKKT’s operations could be harmed because several investors remain wary of trading in cryptocurrencies due to their extreme volatility.

Intense Competition

Several well-known players, such as Robinhood Markets, Inc. (HOOD), Square, Inc. (SQ), and Coinbase Global, Inc. (COIN), have already established market dominance and also offer cryptocurrency trading. BKT has more than 500,000 early-access participating consumers, access to 250 merchant partners, and nearly 100 institutional clients. However, BKKT is still in its early stages of development and faces intense competition in the crowded cryptocurrency trading space.

POWR Ratings Reflect Bleak Prospects

BKKT has an overall D rating, of D which equates to Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. Among these categories, BKKT has a D grade for Value.

The stock has a D grade for Sentiment, which is in sync with unfavorable analyst sentiment. BKKT also has a D grade for Stability, given the stock’s relatively higher volatility compared to the broader market.

BKKT is ranked #65 of 74 stocks in the Technology – Services industry. Also, click here to see BKKT’s additional POWR Ratings (Growth, Momentum, and Quality).

Bottom Line

Even though BKKT failed to attract much attention to its stock market debut, its shares have soared in price on the company’s recent partnerships. However, the stock is highly volatile, and the company is still in its early stages of development. Moreover, it hasn’t yet reported any quarterly earnings. So, amid intense competition, we think it could be wise to avoid the stock now.

How Does Bakkt Holdings (BKKT) Stack Up Against its Peers?

While BKKT has an overall POWR Rating of D, one  could check out these other stocks within the Technology – Services industry holding an A (Strong Buy) rating: Fujitsu Limited (FJTSY) and NetScout Systems, Inc. (NTCT).

Click here to check out our Cryptocurrency Industry Report for 2021

BKKT shares fell $3.52 (-8.28%) in premarket trading Monday. Year-to-date, BKKT has gained 321.83%, versus a 24.04% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...

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