ETHZilla Fuels Massive Stock Buyback with $40M Ethereum Sale, Aims to Bridge Valuation Gap
ETHZilla (NASDAQ: ETHZ), a pioneering Ethereum reserve company, has announced a significant strategic move, liquidating approximately $40 million worth of its Ethereum holdings to repurchase its own stock. This aggressive maneuver underscores the company’s commitment to bolstering its share value amidst market fluctuations.
Strategic Repurchase Program Underway
The company’s stock experienced a notable surge on Monday, closing up 14.5% and further climbing 9% in after-hours trading to reach $22.50. However, this figure remains substantially below its all-time high of $107, achieved when the company first unveiled its ambition to create a substantial Ethereum reserve. ETHZilla, formerly known as 180 Life Sciences Corp., had its board of directors approve a stock repurchase program of up to $250 million as early as August this year.
Since initiating the sale of Ethereum on October 24, ETHZilla has confirmed the repurchase of approximately 600,000 common shares, involving an investment of roughly $12 million.
Addressing the Valuation Discrepancy
In a Monday statement, ETHZilla outlined its clear intent: “The company plans to deploy the remaining proceeds from its ETH sales towards additional stock repurchases and intends to continue monetizing its digital asset holdings to acquire equity until the stock’s discount relative to its Net Asset Value (NAV) normalizes.”
This commitment signifies an ongoing strategy to sell a portion of its crypto assets and reduce the circulating supply of common stock, thereby narrowing the perceived “valuation gap” between its market capitalization and the intrinsic value of its underlying assets.
McAndrew Rudisill, Chairman of ETHZilla, emphasized that the current stock price still presents a “significant discount” when compared to the net value of the company’s Ethereum holdings. He reiterated that the company will persist with its share repurchase efforts to decrease outstanding shares and, consequently, enhance the Net Asset Value per share.
Current Holdings and Influential Backing
Despite the recent sales, ETHZilla maintains a substantial reserve of approximately $400 million in Ethereum, according to its latest disclosures. Adding a layer of investor confidence, renowned Silicon Valley venture capital firm Founders Fund, led by legendary investor Peter Thiel, acquired a 7.5% stake in the company back in August.
A Growing Trend Among Crypto Reserve Companies
ETHZilla is not an isolated case in adopting such a proactive share repurchase strategy. SharpLink Gaming (NASDAQ: SBET), another entity with significant crypto asset holdings, recently approved an even larger stock repurchase program, authorizing up to $1.5 billion. SharpLink Gaming has similarly indicated its intention to execute repurchases when its equity trades at a discount to its crypto asset net worth, signaling a burgeoning trend among companies managing substantial digital asset reserves.
Disclaimer: This article is intended for market information purposes only. All content and views expressed herein are for reference only and do not constitute investment advice. They do not represent the opinions or stance of the author or publisher. Investors should conduct their own due diligence and make independent investment decisions. The author and publisher will not be held responsible for any direct or indirect losses incurred by investors as a result of their trading activities.
