Ethereum-focused digital asset treasury firm ETHZilla recently sold approximately $40 million worth of ether to fund a stock buyback program. Following the sale on October 24, the company has already repurchased around 600,000 shares for about $12 million. This buyback effort is part of a larger $250 million plan authorized by the board.
ETHZilla intends to use the remaining cash from the ether sales to continue repurchasing shares until the stock price reflects its net asset value (NAV). The firm currently still holds approximately $400 million in ether. Interestingly, the ether sold was priced around $3,900 at the time, and the asset spiked to as high as $4,250 over that weekend before settling at around $4,150.
ETHZ’s shares surged 14.5% on Monday and saw an additional 12% increase in after-hours trading following the announcement of the buyback. This move highlights the pressures faced by digital asset treasury companies, as many have seen their stock prices drop significantly, often trading below their NAV due to the current market climate.
According to Blockworks data, ETHZ shares had previously plummeted 90% from their August peak and were trading at a 30% discount to their NAV. The company aims to bolster its stock value by making strategic buybacks. Chairman and CEO McAndrew Rudisill commented that by repurchasing shares while trading below NAV, they can decrease the available shares for stock loan activities and enhance the NAV per share for existing shareholders.
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