Nasdaq-listed SharpLink Gaming (SBET) has adopted a unique approach to maximize its shareholder value through a newly approved repurchase program. In a Friday statement, the Minneapolis-based firm outlined plans that would enable it to repurchase up to $1.5 billion worth of common stock to boost its Ethereum holdings.
Co-Chief Executive Officer of SharpLink Joseph Chalom explained that the move is part of the firm’s structured approach to the capital market. Although the capital budgeted for the program is almost half of SharpLink’s $3.5 billion valuation, Chalom noted that it would help in instances when the company’s shares trade below its net asset value (NAV).
He also mentioned that issuing new shares when the stock price lags NAV would be counterproductive to shareholders, but repurchasing them could be accretive.
In this scenario, the accretive course of action may be to repurchase our common stock. This program provides us with the flexibility to act quickly and decisively if those conditions present themselves.
For context, NAV refers to the per-share market value of a mutual fund or exchange-traded fund (ETF). It is measured by subtracting a fund’s total liabilities from its total assets — which in SharpLink’s case is its ETH stash — including cash and other assets. This figure is then divided by the overall outstanding shares.
Since SharpLink is an Ether-based corporate firm, its NAV moves in tandem with Ethereum’s price trajectory, fluctuating as the firm adds or sheds ETH.
As per reports from Yahoo Finance, SharpLink’s shares climbed over 15% in the early hours of Friday. This sharp uptick followed the renewed optimism within the financial markets following suggestions of possible rate cuts by U.S. central bank Chair Jerome Powell.
Even with this intraday uptick, SBET’s value has dropped 24% in the past four weeks, despite Ether’s over 30% northbound climb during the same period.
At the time of writing, Ethereum is exchanging hands at $4,725 after falling 3.36% from its fresh all-time high of $4,891, reached on August 22.
Here are other key Ether market data:
Similar to the blueprint adopted by most corporate crypto holders, SharpLink’s goal is to boost the amount of Ethereum tied to each share. Supposing its stock trades higher than the value of its Ethereum stash, the company can sell new shares and use the cash to buy more ETH, which increases the value per share.
Michael Saylor’s Strategy has relied on this share-selling strategy for years, with a much bigger and longer-lasting premium. By contrast, SharpLink’s market NAV was 1.08 on Friday, meaning its shares traded only 8% above the value of its Ethereum, as per Ethereum Strategic Reserve data.
In the Friday disclosure, SharpLink clarified that market outcomes will determine the time and number of reacquired shares. The firm also mentioned that no obligation is tied to the program, and it can be paused at any time.
Over the past month, SharpLink has increased its Ether holdings through several series of aggressive purchases — including over $264 million worth of ETH buys in one week. According to the latest data, the firm owns 740,000 ETH, totaling over $3.5 billion as per current market rates.
