SharpLink Gaming Soars on $1.5 Billion Repurchase Plan

• Shares of giant Ethereum holder soar on news of buyback plan
• Company says it will repurchase up to $1.5 billion of its common stock

Shares of SharpLink Gaming (NASDAQ: SBET) surged Friday after the betting affiliate turned Ethereum holder said it will repurchase up to $1.5 billion of its common equity.

In a statement, co-CEO Joseph Chalom said if there are periods when SharpLink shares trade at or below the net asset value of the company’s massive Ethereum stake, it wouldn’t be prudent to issue new stock to fund purchases of the cryptocurrency, but that could be an opportune time to buy back stock.

In this scenario, the accretive course of action may be to repurchase our common stock,” he said in the press release. “This program provides us with the flexibility to act quickly and decisively if those conditions present themselves.”

Based on the company’s market capitalization of $3.05 billion at this writing, a buyback program of $1.5 billion is nearly half SharpLinik’s market cap. In late trading, shares of SharpLink are higher by more than 12% on volume that’s well above the daily average on news of the repurchase program.

Why SharpLink Repurchase Is Meaningful

SharpLink’s sizable buyback program is noteworthy because it could result in the company retiring some of the shares it’s used to fund Ethereum purchases. The company is now one of the biggest corporate owners of the second-largest digital currency – a status it attained in large part by using its stock to fund Ether acquisitions.

Like Michael Saylor’s Strategy (NASDAQ: MSTR), which is now the world’s largest corporate owner of Bitcoin, SharpLink Gaming is leveraging its securities to fund Ether buys. Issuance of new shares, regardless of the reason, dilutes current investors. That underscores why SharpLink surged on news of the repurchase plan.

“The stock buyback program is designed to provide enhanced support to the market, optimize capital allocation and reinforce SharpLink’s long-term commitment to driving sustainable stockholder value,” according to the press release.

SharpLink at a Discount?

Companies with significant cryptocurrency treasury commitments are often seen as proxies on those digital assets. As a result, those stocks often trade at premiums to the net asset values of those holdings because markets use the shares to price in the possibility of future gains by the held cryptocurrency.

Said another way, stocks such as SharpLink don’t spend a lot of time trading at discounts to the held digital assets, but that is the case with SharpLink today. As noted above, its market cap is $3.05 billion, but its Ether holdings are valued at more than $3.5 billion.

Additionally, the company’s staking rewards have climbed to nearly 1,400 Ether since the corporate treasury strategy was announced on June 2.