Sharplink announced the launch of a $1.5 billion share buyback program. The decision is linked to the fact that the company’s stock is trading below its net asset value (NAV). The company said on Tuesday that current market conditions do not allow for the efficient issuance of new shares.
“We believe that the market is currently undervaluing our business,” said Sharplink co-head Joseph Chalom.
He added that instead of issuing shares that trade below net asset value, the company is focused on disciplined capital allocation, including share repurchases, to increase shareholder value.
Pressure on Price and Analysts’ Reaction
A day before the announcement, an NYDIG analyst suggested that crypto treasury companies – those holding large reserves of cryptocurrencies – should launch buyback programs if their shares fall below NAV. According to him, the premium on such stocks is narrowing, and the market needs signals of confidence in the strategy.
Sharplink began the program with the repurchase of 939,000 shares at an average price of $15.98. By the close of trading on Wednesday, the price rose to $16.69, gaining 6,59%. Despite this, Sharplink shares have lost 25,29% over the past 30 days.
Context
Sharplink ranks second in Ethereum reserves among public companies. According to StrategicETHReserve, the company owns 837,230 ETH worth about $3.59 billion. Almost 100% of these assets are staked and generate income, which the company says represents substantial revenue.
Sharplink links the growth of NAV per share to the reduction of circulating shares amid the buyback and its focus on staking profits.
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