SharpLink Stock Rallies, Sees Ethereum Holdings Topping $3 Billion

The shares of SharpLink Gaming (NASDAQ: SBET) surged on Monday after the company said that it has reached $400 million securities purchase agreements with five international institutional investors. The money from these agreements might be used to increase the company's Ethereum holdings to $3 billion.

According to SharpLink Gaming, the agreements with the unnamed investors were priced at $21.76 per share and will generate $400 million in gross profits before commissions and expenses are subtracted. SharpLink Gaming is already the largest corporate owner of the second-largest cryptocurrency.  The closing date of the offering is set for Tuesday, August 12.

SharpLink's stock is up about 10% in lunchtime trading on volume that has already above the daily average due in part to that news and Ether's recent surge, which has seen the digital currency rise 18.51% over the last week and beyond $4,300.

Although it's unclear if any of those companies are taking part in the aforementioned agreements, professional investors BIT Capital, Thames Capital, Two Sigma Securities, State Street, UBS, and Lazard are among SharpLink's biggest owners.

Capital-Raising Binge's SharpLink

SharpLink Gaming has been raising money quickly lately to finance Ether acquisitions, much like Michael Saylor's Strategy (NASDAQ: MSTR), which is currently the biggest corporate owner of Bitcoin worldwide.

"Raising nearly $900 million in capital over the past week underscores the market’s confidence in SharpLink’s ETH treasury strategy,” said co-CEO Joseph Chalom in a statement. “The speed and scale of these investments reflect not only investor trust in SharpLink, but also the growing recognition of Ethereum’s transformative potential.”

The $200 million that Minnesota-based SharpLink, which offers affiliate management services to the online sports betting and iGaming sectors, obtained last week through the sale of its shares to four unnamed institutional investors is still available to the business.  Given that the sale was priced at $19.50 per share, those investors are probably pleased today as SharpLink's stock is currently flirting with $26.

SharpLink raised $279.2 million over the week of July 21–25, which enabled them to purchase 77,209.58 ETH, increasing its cryptocurrency holdings to 438,190.  Since Ether is currently trading at about $4,325 and those purchases were made at an average buying price of $3,756, they are now profitable.

The price of SharpLink's stock is higher than that of Ether Holdings

There are arguably two dangerous aspects of SharpLink stock.  First of all, it is now closely linked to the price movement of Ether.  Second, its trading price is more than the value of the digital currency it owns.

Although the company stated in its press release on Monday that its Ether assets "are expected to exceed $3 billion in value," its current market capitalization of $3.33 billion suggests that investors still think Ether's price will continue to rise.

That premium is not unexpected.  It's the situation that has arisen with Bitcoin and strategy.  SharpLink can take advantage of the premium by selling equities at a price that allows it to purchase more Ether, as Strategy has done in the past. This could push the stock higher.