SharpLink, a company with one of the largest Ethereum (ETH) reserves in the industry, has announced a $1.5 billion stock buyback plan to boost its stock price, which is currently below its net asset value.
SharpLink stated on Tuesday that the company is "currently trading at a price below its net asset value ('NAV'), and the stock buyback will immediately create value for shareholders."
SharpLink co-CEO Joseph Chalom said, "We believe the market is currently undervaluing our business. Rather than issuing stock when the price is below net asset value, we are more focused on disciplined capital allocation, including stock buybacks, to enhance shareholder value."
Just days ago, an analyst from NYDIG pointed out that when the stock price of digital asset reserve companies is below net asset value, buybacks should be considered, warning that the premiums of many cryptocurrency buyer companies are narrowing.
SharpLink officially launched the buyback plan by repurchasing 939,000 shares of common stock at an average price of $15.98 per share. SharpLink is buying back shares at a price below net asset value. The value of its cryptocurrency holdings aims to enhance the net asset value per share and drive up the stock price.
According to Google Finance data, SharpLink Gaming (SBET) closed at $16.69 on Wednesday, up 6.59%.
However, the stock price has dropped 25.29% in the past 30 days. SharpLink added that the company believes its stock is "severely undervalued." The company considers the buyback to be "an extremely attractive investment that demonstrates confidence in the company's long-term strategy."
StrategicETHReserve data shows that SharpLink holds 837,230 Ethereum (ETH), valued at approximately $3.59 billion at the time of publication.
SharpLink stated that nearly 100% of its ETH holdings have been staked for staking rewards, "which brings considerable income to the company."
The company approved the buyback plan on August 22. Chalom stated at the time that the plan allows the company to act quickly and decisively when conditions are right.
NYDIG Global Research Director Greg Cipolaro said on Friday that if the stock of digital asset reserve (DAT) companies is below net asset value, "the most direct approach is to conduct a stock buyback."
He mentioned that if advice were to be given to DAT companies, it would be to reserve part of the raised funds to support the stock price through buybacks.
A few months ago in June, venture capital firm Breed stated that only a few Bitcoin (BTC) reserve companies can withstand the test of time, avoiding the vicious "death spiral" faced by companies holding BTC with stock prices close to net asset value.
Related: U.S. Congress requests the Treasury Department to report on strategic Bitcoin (BTC) reserve details
Original article: “SharpLink Launches $1.5 Billion Stock Buyback Plan Due to Its Stock Price Being Below Asset Value”
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