SharpLink Shares Lifted By TD Cowen ‘Buy’ Rating

• Shares of Ethereum treasury firm bounced as TD Cowen started coverage with a “buy” rating
• Price target of $16 implies stock can more than double
• SharpLink is one of the largest corporate owners of Ethereum

Shares of SharpLink Gaming (NASDAQ: SBET) rallied Friday after TD Cowen initiated coverage of the stock with a “buy” rating, lauding the company for its exposure to both cryptocurrency and sports betting.

In mid-day trading, the stock is higher by 2.65%, though that’s a relatively modest dent in a year-to-date loss of 28%. TD Cowen started coverage of SharpLink with a $16 price target, implying upside of 150% from where the stock closed on April 9. SharpLink was among several cryptocurrency treasury companies in which TD Cowen has initiated coverage.

The model for companies holding large amounts of digital currency was driven in significant part by Michael Saylor’s Strategy (NASDAQ: MSTR), which is the largest corporate owner of Bitcoin. Some market observers have even dubbed SharpLink “the Strategy of Ethereum.”

SharpLink Has Avenues to Defray Ethereum Risk

As of the end of last year, SharpLink owned 864,597 Ether and as of March 6, it was the second-largest publicly traded Ether holding in the world.

Said another way, the stock’s fortunes are very much tied to the cryptocurrency’s price action.

That’s been a drag on the shares because Ether, like other cryptocurrencies, has struggled of late and labors well below previous highs. As TD Cowen points out, SharpLink can mitigate some of that risk by way of staking income.

In the fourth quarter, the company notched staking revenue of $15.3 million, up about 50% from the prior quarter.

TD Cowen says that staking revenue can help SharpLink manage operating losses while Ether prices are weak and it serves as differentiating trait relative to other crypto treasury entities. That staking income may also be a sign the stock currently offers value.

In Ether staking, owners of the digital currency essentially lock up all or portions of their holdings to secure the underlying network.

That serves as the bedrock of the proof-of-stake concept on which Ether and some other digital currencies operators. Investors are rewarded for staking, thus Ether can be a yield-bearing asset when staked.

Other SharpLink Nuggets

TD Cowen lauded SharpLink for possessing a unique combination of sports betting exposure through large affiliates and its obvious ties to Ether. However, the investment community focuses more on the latter because the company has made it’s a crypto treasury outfit.

SharpLink also as a strong balance sheet with $28.5 million in cash on hand and $1.9 million in USDC stablecoins as of the end of last year.