Author: Fairy, ChainCatcher
Editor: TB, ChainCatcher
SharpLink Gaming, hailed by the market as the "Ethereum version of MicroStrategy," was originally riding the wave of ETH treasury narrative, but an SEC document caused its stock price to plummet nearly 70% after hours.
From hype to doubt, faith diving into panic. This article will dissect this sudden "trust crisis" and discuss the hidden landscape behind it.
Market Misinterpretation Behind the Plunge
In late May, SharpLink Gaming completed a $425 million PIPE (Private Investment in Public Equity), with investors including ConsenSys, Galaxy, and Pantera Capital, veteran institutions heavily invested in Ethereum, with funds used to acquire ETH as reserve assets. This operation drove SharpLink's stock price to a peak of $124, rising over 40 times before the financing news was announced.
Yesterday, SharpLink Gaming submitted an S-3ASR registration statement to the US SEC, authorizing the potential resale of up to 58,699,760 shares related to the PIPE financing. This means over 100 PIPE investors could choose to sell their holdings.
Momentarily, the market misinterpreted this as "PIPE investors have begun to request selling," and panic emotions quickly spread.
Market Misinterpretation
SharpLink's after-hours stock price once dropped to $8.75, a decline of 73%, before slightly rebounding to the $10 range.
Source: yahoo!finance
Subsequently, SharpLink's Board Chairman and ConsenSys CEO Joseph Lubin clarified: this document is just a routine registration process after PIPE, aimed at "pre-registering shares for potential resale," and does not represent any actual selling. He emphasized: "The 'post-issuance shareholding' in the document is hypothetical data, and neither ConsenSys nor I have sold any shares."
Although this wave of turbulence has temporarily subsided, the market remains full of speculation about SharpLink's movements. BTCS Inc CEO Charles Allen stated: "From my experience, given the background of some transaction investors, they may indeed be quietly selling. Moreover, 'prefunded warrants' are actually an arrangement to avoid holding disclosure and becoming an affiliated party."
He further pointed out that after obtaining WKSI qualification on May 30th, SharpLink immediately submitted a $1 billion ATM (At-The-Market) plan, potentially completing financing through continuous trading without immediate disclosure. If operations go smoothly, they might announce a $1 billion ETH purchase tomorrow, reigniting market enthusiasm.
Is SBET Currently at 100% Premium?
SharpLink's (SBET) current stock performance and premium reveal complex market expectations. According to technology investor Zheng Di's analysis, SBET's current premium is approximately 100%.
Based on the SEC filing, the company's fully diluted total shares are 77,526,682, and with an after-hours stock price of around $10, the total market value is about $800 million. The registered share quantity is 75,319,345 shares (assuming all advisor and investment bank warrants have been converted), plus the original 690,000 shares. Zheng Di thus infers that the previously $1 billion ATM has actually only executed about 1,517,337 shares, indicating most of the ATM quota remains unused, with future dilution risk.
He states that this PIPE financing totaled $425 million. Considering ConsenSys as the company's Ethereum strategy advisor, and with reports that ConsenSys-related addresses have purchased around $300 million in ETH, there's reason to believe most, if not all, financing funds have been used to purchase ETH. Given ETH's recent limited price fluctuations, the company's current ETH holdings should maintain a market value of around $400 million.
Therefore, combining these factors, Zheng Di estimates SBET's current market premium at around 100%.
SBET's premium to some extent reflects market recognition of its asset value, especially the potential value of its Ethereum reserves. However, an excessive premium also brings market risks, and future stock price volatility may intensify with more ATM quota release and potential equity dilution.
SharpLink's drama continues to unfold. If, as Zheng Di analyzed, there's still room for equity dilution, it may bring short-term pressure; or if, as Charles Allen suggests, news of a $1 billion ETH purchase might be disclosed soon, it could reignite market sentiment and push up the stock price.
This combination of "opacity" and "possibilities" makes SharpLink both controversial and full of imagination. The real climax may still be ahead.
