Ethereum Treasury Giant SharpLink Launches $1.5B Buyback As Shares Trade Below NAV

SharpLink Gaming, the second-biggest Ethereum treasury firm globally, has started a $1.5 billion share buyback program as its stock trades below its Net Asset Value (NAV).

To kick off the program, SharpLink bought approximately 939,000 shares of its common stock at an average price of $15.98, the company said in a statement.

That helped send SharpLink’s share price up 6% to close Tuesday’s trading session off at $16.69, according to Google Finance. The buying activity continued in after-hours trading, with the company’s share price climbing another 0.48%.

SharpLink Gaming share price (Source: Google Finance)

SharpLink Gaming shares remain down over 2% in the past week and by more than 25% in the past month.

The drop in SharpLink’s NAV means that investors are valuing the company at less than the dollar value of the total ETH it holds on its balance sheet. 

SharpLink Aims To Boost Confidence In Long-Term Strategy

SharpLink currently has around 837.23K ETH tokens valued at approximately $3.24 billion on its balance sheet, according to StrategicETHReserve data. 

The only company that holds more ETH tokens than SharpLink is BitMine Immersion Technologies with its reserves of 2.07 million ETH worth around $7.74 billion.

Although SharpLink has added to its ETH holdings in recent weeks, its stock price continued to drop. That was despite the largest altcoin by market cap hitting a new all-time high (ATH) of $4,953.73 on Aug. 24. 

SharpLink said the buybacks “represent a compelling investment that underscores confidence in its long-term strategy and growth prospects.” 

Along with the 939,000 shares that have already been bought, SharpLink said it will purchase additional shares depending on market conditions using either cash on hand, cash available from operating activities such as staking, or cash from alternative forms of funding.

The company said it is “in a position of strength” and holds “no current outstanding debt.”

“Even more compelling, nearly 100% of the $3.6 billion of ETH is staked, which is generating material revenue for the Company,” it added. 

The company’s co-chief executive officer Joseph Chalom said that “maximizing shareholder value” remains a top priority for the company. 

Treasury Firms Must Set Aside Funds For Buybacks: NYDIG

New York Digital Investment Group (NYDIG) warned in a Sept. 5 report that “a bumpy ride may be ahead” for Digital Asset Treasury (DAT) firms.

“If we were to give one piece of advice to DATs, it’s to save some of the funds raised aside to support shares via buybacks,” it said.

In June, the venture firm Breed also warned that only a few Bitcoin treasury companies will avoid a “death spiral.”