ETHZilla (ETHZ), a digital asset treasury company specializing in Ethereum, sells approximately $40 million of Ether to Floday Ethereum$4,125.91 The company announced Monday that it has so far used some of the cash to buy back shares.
Since the Oct. 24 sale, the company has repurchased about 600,000 shares for about $12 million. The stock repurchase is part of a broader $250 million stock repurchase plan approved by the company’s board of directors.
The company said it plans to continue buying back shares with the remaining cash raised. Additionally, the company intends to continue selling ETH to fund further share buybacks “until the discount to NAV normalizes.”
As of now, the company still has about $400 million in ETH.
Interestingly, Friday’s ETH sale likely took place around $3,900. ETH then rose over the weekend, rising to $4,250 overnight before falling back to its current level of $4,150. So while the timing of the ETH sale may not have been ideal, this buyback effort certainly sends a warning to sellers of the stock to be wary of selling short at a deep discount to NAV.
ETHZ shares rose 14.5% on Monday, driven by a strong rally in the lagging digital asset treasury sector. The stock price rose another 12% in after-hours trading following the stock buyback announcement.
The maneuver highlights the continued pressures facing digital asset bonds. With stock prices plummeting over the past few months, many stocks are now trading below the net asset value (NAV) of their underlying holdings, limiting their ability to raise capital to expand their crypto holdings. According to Blockworks data, ETHZ is down 90% from its August peak and is trading at a 30% discount to NAV.
“By opportunistically repurchasing our shares while our stock is trading below our NAV, we plan to increase the company’s NAV per share while reducing the number of shares available for lending and borrowing,” Chairman and CEO McAndrew Rudisill said in a statement.
