Trump Media & Know-how Group (NASDAQ: DJT) is not worthwhile or producing a lot income, however the one factor it does have is money, and it may quickly put that to work. The corporate’s enterprise facilities round its Reality Social platform, and it has been taking a look at increasing into different areas as effectively, together with streaming video.
And that might not be all, as the social media enterprise seems to have its sights set on buying a cryptocurrency firm, Bakkt Holdings (NYSE: BKKT).
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Bakkt operates a platform that permits customers to purchase, promote, and retailer cryptocurrencies. The corporate generated $1.9 billion in gross sales over the trailing 12 months, however with a excessive value of gross sales, it squeezed out a tiny gross revenue of simply $74 million throughout that stretch. After factoring in its working bills, the enterprise has incurred a lack of over $54 million throughout the previous yr.
The corporate additionally does not assure it will find a way to stick round for lengthy. It has talked about in the previous that it “might not be ready to proceed as a going concern.” Earlier this yr, the struggling inventory additionally accomplished a 1-for-25 reverse stock split to assist prop up its worth and keep above the $1 wanted to stay listed on the New York Inventory Trade.
As of the finish of September, the firm reported money and money equivalents totaling $29 million. That’s a low determine when you think about that over the previous 9 months, the firm used $52.6 million over the course of its day-to-day working actions.
If Trump Media acquires Bakkt, it may stand to profit from the hype surrounding cryptocurrencies this yr. Bitcoin soared to document highs this yr amid pleasure that President-elect Donald Trump’s pro-crypto stance may assist digital currencies attain increased valuations.
On the flip aspect, nonetheless, Bakkt is a cash-burning and unprofitable enterprise. To maintain it afloat, Trump Media might have to repeatedly allocate assets to the firm to guarantee it could actually stay operational. The plain drawback for buyers is that it might solely exacerbate Trump Media’s present monetary scenario. It additionally is not worthwhile or producing optimistic working money movement. Whereas including Bakkt would diversify Trump Media and considerably develop its income, it will not essentially enhance its prospects for profitability.
In the finish, Trump Media may need much more money if it finally ends up buying Bakkt, heightening the danger of dilution and frequent share choices in the future.
