Ethereum-focused digital asset treasury firm ETHzilla (ETHZ) sold nearly $40 million worth of Ether on Friday The company said Monday that it is using some of the cash it has so far from its treasury to repurchase shares of its stock.
Since the sale on October 24, the firm bought back about 600,000 shares for about $12 million. The buyback is part of a comprehensive $250 million buyback plan approved by its board.
The company said it plans to continue buybacks with the remaining cash raised. Additionally, it intends to continue selling ETH for more buybacks “until discounts to NAV normalize.”
For now, the firm still has about $400 million in ETH.
Interestingly, ETH’s selloff on Friday likely occurred in the $3,900 area – ETH subsequently surged throughout the weekend, trading as high as $4,250 overnight before falling back to the current $4,150. So while the timing of the ETH sale may not have been ideal, the repurchase effort will certainly send a warning to sellers of the stock to be wary of shorting at any substantial discount to NAV.
ETHZ shares surged 14.5% on Monday, with the beaten-down digital asset treasury sector leading the charge. The stock rose 12% in after-hours trading following the buyback announcement.
This maneuver underlines the ongoing pressure on digital asset treasuries. Many stocks are now trading below the net asset value (NAV) of their underlying holdings as their stock prices have declined over the past months, limiting their ability to raise funds to expand their crypto holdings. Blockworks data shows that ETHZ has declined by 90% from its August peak, and is trading at a 30% discount to its NAV.
“By opportunistically repurchasing shares when our stock is trading below NAV, we plan to reduce the number of shares available for stock lending/borrowing activity while increasing the company’s per share NAV,” Chairman and CEO McAndrew Rudisill said in a statement.