Digital asset platform Bakkt finds itself struggling to stay afloat with dwindling cash reserves. The company’s recent filing with the U.S. Securities and Exchange Commission (SEC) paints a worrying picture, raising concerns about its long-term viability.

Financial Instability Looms

The filing reveals Bakkt’s current cash and restricted cash might not be enough to sustain operations for the next 12 months. This uncertainty stems from the company’s ambitious expansion plans and the volatile nature of the cryptocurrency market.

Despite these efforts, Bakkt – once hailed as a potential “Bitcoin savior” – admits it cannot guarantee substantial revenue growth beyond historical levels, hindering its ability to achieve sustainable profitability and generate sufficient cash flow.

The company stated in a document filed with the SEC yesterday:

“We do not believe that our cash and restricted cash are sufficient to fund our operations for the 12 months following the date of [the filing].”

Operating Losses And Liquidity Concerns

The report anticipates continued operating losses and cash burn, further straining their financial situation. If Bakkt fails to secure additional capital through debt or equity offerings, they risk losing the ability to maintain sufficient liquidity and effectively operate the business. This raises significant doubts about the company’s “going concern” status, meaning its ability to continue operations as a viable entity.

Following the SEC filing, Bakkt’s stock price witnessed a brutal 8% drop in after-hours trading, closing at $1.30 on Thursday. This significant decline reflects the growing concerns and anxieties surrounding the company’s financial health and future prospects.

Meanwhile, adding to the worries, Bakkt acknowledges potential weaknesses in its internal controls over financial reporting. This lack of robust control procedures raises questions about the accuracy and reliability of the company’s financial statements, further eroding investor confidence.

Crypto: Shifting Focus And Unmet Expectations

Founded by Intercontinental Exchange (ICE), the owner of major derivatives exchanges and the New York Stock Exchange, Bakkt initially aimed to revolutionize Bitcoin payments, partnering with giants like Starbucks.

However, the company later pivoted towards business-to-business (B2B) technology services, discontinuing its consumer-focused digital wallet. This strategic shift, while intended to capture a broader market, hasn’t yielded the anticipated results, leaving investors disillusioned.

how did ICE and bakkt so terribly bungle things in a world where price has 10x’d and tradfi institutions have dominated over startups in the US

— juthica (@juthica) February 7, 2024

Uncertain Path Forward

The SEC filing lacks any mention of concrete solutions or plans for securing additional capital. This further amplifies the uncertainty surrounding Bakkt’s future. While the company attempts to navigate its financial challenges, investors remain cautious, carefully assessing the risks involved before making any investment decisions.

Featured image from SiliconAngle, chart from TradingView