Author: Fairy, ChainCatcher

Editor: TB, ChainCatcher

SharpLink Gaming, hailed by the market as the "Ethereum version of MicroStrategy," was originally riding the wave of the ETH treasury narrative. However, an SEC filing caused its stock price to plummet nearly 70% in after-hours trading.

Hot Pursuit Turns to Questioning, Faith Dives into Panic. This article will dissect this sudden "crisis of confidence" and discuss the hidden picture behind it.

Market Misreading Behind the Plunge

At the end of May, SharpLink Gaming completed a $425 million public company private placement (PIPE), with investors including ConsenSys, Galaxy, and Pantera Capital, a group of established institutions heavily invested in Ethereum. The funds were used to acquire ETH as a reserve asset. This operation caused SharpLink's stock price to soar to a high of $124, an increase of more than 40 times compared to before the announcement of the financing news.

Yesterday, SharpLink Gaming submitted an S-3ASR registration statement to the U.S. SEC, authorizing the resale of up to 58,699,760 PIPE financing-related shares. This means that more than 100 PIPE investors can choose to sell their holdings at any time.

For a time, the market misinterpreted it as "PIPE investors have begun to apply for shipment," and panic quickly spread.

SharpLink's after-hours stock price once fell to $8.75, a drop of as much as 73%, before rebounding slightly to the $10 range.

Source: yahoo!finance

Subsequently, SharpLink Chairman of the Board and Consensys CEO Joseph Lubin issued a clarification: This document is just a routine registration process after PIPE, and its purpose is to "pre-register shares for potential resale," which does not represent any actual selling. He emphasized: "The 'number of shares held after issuance' in the document is hypothetical data. Consensys and I personally have not sold any shares."

Although this storm has temporarily subsided, the market is still full of speculation about SharpLink's movements. BTCS Inc CEO Charles Allen said: "In my experience, given the background of some of the investors involved in the transaction, they may indeed be quietly selling off. In addition, 'pre-funded warrants' are actually an arrangement to avoid holding disclosure and avoid becoming affiliates."

He further pointed out that SharpLink submitted a $1 billion ATM plan (at-the-market offering) immediately after obtaining WKSI qualification on May 30. They may have quietly completed the financing through continuous trading without immediate disclosure. If the operation goes smoothly, they may announce the purchase of $1 billion worth of ETH tomorrow, and then rekindle market enthusiasm.

SBET Currently at a 100% Premium?

SharpLink's (SBET) current stock price performance and premium also reveal investors' complex expectations for its future trend. According to Zheng Di, an investor in cutting-edge technology, SBET's current premium is approximately 100%.

According to documents submitted to the SEC, the company's fully diluted total share capital is 77,526,682 shares. Combined with the after-hours stock price of approximately $10, the company's total market value is approximately $800 million. The number of shares registered this time is 75,319,345 (assuming that the warrants of consultants and investment banks have been fully converted and subscribed), plus the original share capital of 690,000 shares. Zheng Di deduced that the previous ATM (at-the-market offering) worth $1 billion actually only executed approximately 1,517,337 shares, indicating that most of the ATM quota may not have been used, and there is still a risk of dilution in the future.

He said that the total amount of this PIPE financing is $425 million. Considering that Consensys is the company's Ethereum strategy consultant, and there are reports that Consensys-related addresses have purchased approximately $300 million worth of ETH, there is reason to believe that most or all of the financing funds have been used to purchase ETH. Given the recent limited price fluctuations of ETH, the company's existing ETH holdings should maintain a market value of approximately $400 million.

Therefore, combining the above factors, Zheng Di estimates that SBET's current market premium is approximately 100%.

SBET's premium reflects, to some extent, the market's recognition of its asset value, especially the potential value of its Ethereum reserves. However, the excessively high premium also brings market risks. In the future, as more ATM (at-the-market offering) quotas are released and potential equity dilution occurs, stock price fluctuations may intensify.

SharpLink's drama is still being staged. If, as Zheng Di analyzed, there is still room for equity dilution in the future, it may bring pressure of volatility in the short term; and if, as Charles Allen said, the news of purchasing $1 billion worth of ETH may be disclosed in the near future, it may rekindle market sentiment and push up the stock price.

This combination of "opaqueness" and "possibility" makes SharpLink both controversial and full of imagination. The real climax may still be ahead.