TLDR ETHZilla sold $40 million worth of ETH on October 24 to fund a stock buyback program as shares traded 30% below net asset value The company has repurchased 600,000 shares for $12 million so far from its approved $250 million buyback plan Meme stock investor Dimitri “Capybara Stocks” Semenikhin acquired over 2% of ETHZilla [...] The post ETHZilla Sells $40M in Ethereum to Buy Back Shares at Discount – Here’s Why appeared first on CoinCentral.TLDR ETHZilla sold $40 million worth of ETH on October 24 to fund a stock buyback program as shares traded 30% below net asset value The company has repurchased 600,000 shares for $12 million so far from its approved $250 million buyback plan Meme stock investor Dimitri “Capybara Stocks” Semenikhin acquired over 2% of ETHZilla [...] The post ETHZilla Sells $40M in Ethereum to Buy Back Shares at Discount – Here’s Why appeared first on CoinCentral.

ETHZilla Sells $40M in Ethereum to Buy Back Shares at Discount – Here’s Why

TLDR

  • ETHZilla sold $40 million worth of ETH on October 24 to fund a stock buyback program as shares traded 30% below net asset value
  • The company has repurchased 600,000 shares for $12 million so far from its approved $250 million buyback plan
  • Meme stock investor Dimitri “Capybara Stocks” Semenikhin acquired over 2% of ETHZilla shares and pushed management to execute the buyback strategy
  • ETHZ stock jumped 14.5% on Monday and gained another 12% in after-hours trading following the buyback announcement
  • ETHZilla still holds around $400 million in ETH after the sale and plans to continue selling crypto to fund more buybacks

ETHZilla, an Ethereum treasury company, sold approximately $40 million worth of ETH from its holdings last Friday. The sale was designed to fund a share buyback program as the stock traded well below the value of its crypto assets.

The company executed the ETH sale on October 24. Since then, ETHZilla has repurchased around 600,000 shares for roughly $12 million.

The buyback is part of a larger $250 million program that the company’s board approved in August. ETHZilla plans to continue purchasing its own shares using the remaining cash from the ETH sale.

The move came after investor Dimitri “Capybara Stocks” Semenikhin took a position in the company. Semenikhin, who gained attention for his role in Beyond Meat’s recent stock rally, purchased more than 2% of ETHZilla’s shares.

Semenikhin told the company’s management that he believed they were underutilizing the buyback program. He published an open letter urging executives to sell ETH holdings and repurchase shares trading at a discount.

Less than an hour after the investor posted his letter, ETHZilla announced the sale and buyback plan. Chairman and CEO McAndrew Rudisill said the company is leveraging its balance sheet to execute share repurchases.

Discount to Net Asset Value

ETHZilla’s stock had been trading at a discount to its net asset value (NAV). The shares traded at roughly 30% below NAV before the announcement.


ETHZ Stock Card
Ethzilla Corp., ETHZ

The stock price had dropped as much as 90% from its August peak. This discount meant investors could buy shares at a price below the actual value of the ETH the company holds.

Rudisill explained that repurchasing shares below NAV would reduce shares available for borrowing activity. It would also increase the NAV per share for remaining shareholders.

The company completed a 1-for-10 reverse stock split last week. This move aimed to boost the share price and attract institutional investors.

Stock Performance

ETHZ shares rallied 14.5% on Monday during regular trading hours. The stock gained another 12% in after-hours trading following the buyback news.

Shares had dropped to $12.78 last week but rebounded to $20.65 at Monday’s close. After-hours trading saw the price reach $23.00.

The timing of the ETH sale may not have been optimal. The company likely sold its ETH around $3,900 on Friday.

Ethereum’s price then rose over the weekend, reaching as high as $4,250 before pulling back to around $4,150. Despite the timing, the buyback program appears to have boosted investor confidence.

ETHZilla still holds approximately $400 million worth of ETH after the sale. The company previously held 102,916 ETH, ranking sixth among publicly traded Ethereum treasury firms.

Billionaire Peter Thiel is also a shareholder in ETHZilla. Thiel and related entities purchased a 7.5% stake in the company in August.

The post ETHZilla Sells $40M in Ethereum to Buy Back Shares at Discount – Here’s Why appeared first on CoinCentral.

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