SharpLink Continues Aggressive Stock Buyback Amid Expanding Ethereum Holdings
By: Eva Baxter
SharpLink Gaming has recently executed an ambitious stock repurchase program despite a slight decline in its share prices. This tactical move saw the acquisition of an additional 1 million shares, each bought at an average price of $16.67. However, these buybacks did not prevent the stock from slipping by 2.8% to $16.32 in the New York Stock Exchange.
The company's aggressive buyback strategy aligns with its $1.5 billion authorization, sanctioned in August 2023, and underscores a broader plan funded through various sources such as cash reserves, staking income, and alternative financing. So far, SharpLink has retired almost 1.93 million shares at the expense of approximately $32 million.
Rapid Expansion of Ethereum Reserves
Parallel to the repurchasing endeavors, SharpLink has significantly bolstered its Ethereum portfolio. As of mid-September, the company reported owning 838,152 ETH—an increase from 740,760 ETH the previous month—valued at nearly $3.86 billion. This figure includes an added 3,240 ETH earned through strategic staking practices. Supported by Ethereum pioneer Consensys, SharpLink is recognized as the second-largest corporate crypto holder, trailing only behind Bitmine Immersion with its massive inventory of over 2 million tokens.
The collective Ethereum holdings of SharpLink, alongside Bitmine Immersion and others, form the bulk of Ethereum assets maintained by approximately 70 public digital asset treasury firms, each holding a minimum of 100 ETH.
Strategic Buybacks and Market Valuation
SharpLink's buyback strategy is particularly focused on instances where the stock's net asset value (NAV) falls below one, indicating potential undervaluation relative to its crypto assets. As recorded, SBET's NAV was at 0.91x, pointing to an approximate 9% undervaluation when juxtaposed with its Ethereum reserves.
Buybacks, while becoming increasingly common within digital asset treasury spaces, are not universally embraced. Critics argue that they prioritize short-term share price enhancements. However, CEO Joseph Chalom, formerly of BlackRock, defends the strategy as being "immediately accretive" and conducive to long-term shareholder gains.
Despite an earlier surge in stock prices following a collaboration with Consensys, resulting in shares peaking over $78, SharpLink has reaffirmed its commitment to aligning shareholder value with Ethereum's growth. This underscores its broader strategy of token accumulation and selective buybacks, operating under the principle of "buy low and sell high."
