Sharplink Initiates $1.5 Billion Share Buyback to Counter Stock Undervaluation
Sharplink Gaming, the second-largest Ether (ETH) treasury company, has launched a $1.5 billion share repurchase plan to address its stock trading below net asset value (NAV). The move aims to enhance shareholder value by increasing NAV per share and supporting the stock price.
Repurchase Details and Market Reaction
On Tuesday, Sharplink repurchased 939,000 common shares at an average price of $15.98, below the current NAV, signaling management’s confidence in the company’s intrinsic value. Shares closed Wednesday at $16.69, marking a 6.59% increase, though the stock remains down 25.29% over the past 30 days.
Co-CEO Joseph Chalom emphasized the company’s disciplined capital allocation strategy: “Rather than issue equity while trading below NAV, we are focused on disciplined capital allocation – including share repurchases – to increase stockholder value.” He added, “We believe the market currently undervalues our business.”
Strong Ether Holdings and Revenue Generation
Sharplink holds approximately 837,230 Ether, valued at around $3.59 billion according to StrategicETHReserve data. Nearly all of these holdings are staked, generating substantial revenue streams for the company through blockchain rewards.
Industry Perspective on Buybacks
The buyback program, authorized on August 22, aligns with recent analyst recommendations. Greg Cipolaro, global head of research at NYDIG, recently advised digital asset treasury companies to reserve funds for buybacks when shares trade below NAV, describing buybacks as the “most straightforward course of action” to support share prices.
Such strategies come amid concerns that many crypto treasury firms face narrowing premiums and the risk of downward valuation pressures. Venture firm Breed has previously cautioned that only a select few Bitcoin treasury companies will avoid a “death spiral” triggered by shares trading close to NAV.
FinOracleAI — Market View
Sharplink’s $1.5 billion share buyback is a strategic move to bolster investor confidence and support its stock price, which currently trades below its net asset value. By repurchasing shares at a discount, the company aims to enhance NAV per share and signal management’s conviction in its long-term prospects.
Risks include continued market volatility in crypto assets and the potential for further share price declines if broader crypto market sentiment weakens. Investors should monitor the pace of buybacks, Ether price fluctuations, and overall crypto treasury sector trends to gauge the program’s effectiveness.
Impact: positive
