Ethereum treasury company SharpLink's stock dips slightly after another round of buybacks

Ethereum treasury company SharpLink Gaming (ticker SBET) is continuing its stock buyback program with an additional purchase of 1 million shares. The stock, repurchased at an average purchase price of $16.67 per share, is down 2.8% at 16:15 UTC to around $16.32.

In August, the Minneapolis, Minnesota-based firm’s board approved a $1.5 billion stock buyback program. So far, SharpLink has repurchased approximately 1.93 million shares for around $32 million, while continuing to add to its ETH balance sheet holdings.

At the time the Consensys-backed firm announced its buyback program, SharpLink held approximately 740,760 ETH. Today, nearly a month later, SharpLink said it holds 838,152 tokens, valued at $3.86 billion, according to The Block’s price data. This total includes the 3,240 ETH ($14.4 million) earned via staking since June.

The firm said it has repurchased approximately 1.93 million shares in total, drawing roughly $32 million against its buyback facility so far. SharpLink disclosed its first buyback on Sept. 9, confirming it would only acquire stock when its net asset value (NAV) falls below 1, signaling that it is “undervalued.”

SharpLink is the second-largest ETH treasury firm, following Bitmine Immersion, the firm backed by Peter Thiel’s Founders Fund, with over 2 million stockpiled ETH, representing approximately two out of three ETH tokens stacked by public digital asset treasury companies, according to The Block’s data. There are approximately 70 Ethereum-focused DATs with at least 100 ETH on the books, cumulatively holding 3.1 million tokens.

SharpLink’s stock strategy

Stock buybacks can be controversial even for traditional businesses with cash flows, let alone a small-cap gaming firm turned ETH juggernaut. However, share repurchase programs are increasingly common among digital asset treasury firms, which typically launch with the mandate to raise funds to buy tokens.

While some critics argue that buybacks prioritize short-term stock price boosts over long-term accumulation and can signal a lack of confidence in a token, SharpLink CEO Joseph Chalom, a former BlackRock exec, maintains that they are immediately “accretive” and compound long-term stockholder value.

According to its dashboard, SharpLink currently has a fully diluted NAV of 0.91x, meaning the market value of SBET is underperforming its ETH holdings by about 9%. The firm has already pledged not to use its at-the-market (ATM) stock facility to buy tokens when NAV dips below 1, which would further dilute its value by issuing more shares.

In other words, SBET buybacks are arguably an attempt to “buy low and sell high.” SBET shares rose over 4% following its first stock repurchase of about 939,000 shares, though dipped following this most recent announcement, The Block's stock price page shows. SBET hit a recent high in June above $78 shortly after announcing a partnership with Consensys, the Ethereum development firm led by Joseph Lubin. The stock last traded at that level in 2015, according to Nasdaq.

“We continue to be focused on stockholder value. By expanding our ETH concentration, we are reinforcing our commitment to align the long-term interests of SharpLink, Ethereum, and our shareholders, while showcasing how digital assets can be responsibly and strategically deployed to drive meaningful value creation,” Chalom said in Tuesday’s statement.

The SBET repurchases are funded with cash on hand, staking income, and alternative forms of financing, rather than debt. The firm carries no debt and reportedly stakes nearly 100% of its ETH.

SharpLink is not the only DAT to initiate a buyback program. For instance, in August, Ethereum treasury firm ETHZilla authorized a $250 million stock buyback plan, while Bitcoin treasury firm Strive announced on Monday a $500 million stock repurchase program as part of a nearly $1 billion financing plan to increase its “bitcoin per share.”