Ethereum-focused digital asset treasury company ETHZilla (ETHZ) sold about $40 million worth of ether on Friday of its treasury, and has so far used some of the cash to buy back its own shares, the company saying on Mondays.
Since the sale on October 24, the company has repurchased about 600,000 shares for approximately $12 million. The buybacks are part of a broader $250 million buyback plan approved by its board of directors.
The firm said it plans to continue buybacks with the remaining cash raised. Additionally, it intends to continue selling ETH to fund further buybacks “until the discount to NAV normalizes.”
For now, the company still holds around $400 million worth of ETH.
Interestingly, the ETH sales made on Friday were likely made in the $3,900 area; ETH subsequently rose throughout the weekend, trading as high as $4,250 overnight before retreating to the current $4,150. So while the timing of the ETH sales may not have been ideal, the buyback effort will surely send a warning to stock sellers to be wary of shorting any substantial discount to NAV.
ETHZ shares rose 14.5% on Monday alongside a major rally in the weakened digital asset treasury sector. The stock rose another 12% in after-hours trading following the buyback announcement.
The move underscores the continued pressure digital asset hoards face. Many stocks now trade below the net asset value (NAV) of their underlying holdings as their share prices have plummeted in recent months, limiting their ability to raise funds to expand their cryptocurrency holdings. ETHZ plunged as much as 90% from its August peak and traded at a 30% discount to its NAV. Block data sample.
“By opportunistically repurchasing shares while our shares trade below NAV, we plan to reduce the number of shares that are available for stock lending/lending activity, while increasing the company’s NAV per share,” Chairman and CEO McAndrew Rudisill said in a statement.
