Why Bakkt Holdings May Buy Bitcoin with Its $1 Billion Raise

Bakkt Holdings (BKKT), a digital asset platform, has filed an S-3 registration statement with the US Securities and Exchange Commission (SEC) to raise up to $1 billion through various securities offerings.

The company intends to use the proceeds for general corporate purposes, including working capital. Additionally, Bakkt may potentially buy Bitcoin (BTC) or other digital assets under its updated investment policy.

How Bakkt’s $1 Billion Raise Could Lead to a Bitcoin Investment

The shelf registration was filed on June 26. For context, a shelf offering is a securities offering where a company registers many securities with the SEC in advance but does not immediately sell all of them. 

Instead, the company can “shelf” (or hold) the securities for future sale when market conditions are favorable or the company needs capital. Bakkt Holdings’ filing allows it to raise up to $1 billion through a combination of Class A common stock, preferred stock, debt securities, warrants, or units in one or more future offerings.

“The aggregate offering price of the securities we sell pursuant to this prospectus will not exceed $1,000,000,000. Each time securities are offered with this prospectus, we will provide a prospectus supplement that will describe the specific amounts, prices, and terms of the securities being offered and the net proceeds we expect to receive from that sale,” the S-3 reads.

Notably, earlier this month, Bakkt’s Board of Directors approved a revised corporate investment policy, allowing the company to invest in Bitcoin and other digital assets as part of its broader treasury and strategic plans. However, the company has yet to buy Bitcoin or any other digital asset.

“We may acquire Bitcoin or other digital assets using excess cash, proceeds from future equity or debt financings, or other capital sources,” the filing stated.

The firm also mentioned that to finance its Bitcoin and digital asset purchases, it plans to explore other financing options. These include issuing convertible notes, bonds, or debt instruments.

Meanwhile, the S-3 highlighted Bakkt’s ongoing financial challenges, raising concerns about the company’s long-term sustainability.

“We have limited operating history and a history of operating losses. A large percentage of our revenue is concentrated with a single client that has notified us it will not be renewing its agreement with us. The loss of this client will materially and adversely affect our business, financial condition, results of operations and future prospects,” the firm added.

Despite these concerns, the announcement sparked a positive market reaction. According to Google Finance data, BKKT appreciated 3.09% to close at $13.3. Nevertheless, in after-hours trading, the share prices slightly declined by 0.60%.

This uptick comes amid a broader downtrend. Over the past year, BKKT has dipped 35.6%. If Bakkt Holdings proceeds with allocating capital to Bitcoin, it will join a growing list of firms that have adopted a similar strategy.

As a result, many of these companies have seen positive effects on their stock prices. 

“Metaplanet’s stock has soared 7,963% since it announced its BTC purchase on April 8, 2024,” Lookonchain wrote.

The blockchain analytics firm also revealed that, of the 20 publicly traded companies that have announced Bitcoin purchases, 8 have seen their stock prices increase. Nevertheless, 12 have experienced declines.