ETHZilla, an Ethereum treasury firm, sold portions of its ETH holdings to repurchase approximately $40 million in shares on Monday, responding to investor pressure for better shareholder value. This move, part of a $250 million buyback program, boosted shares by 14% during trading and further after hours, trading at a discount to net asset value.
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Investor Influence: Meme stock influencer Dimitri Semenikhin acquired 2.2% of ETHZilla shares, urging management to utilize the buyback program more aggressively.
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Share Performance: ETHZ stock rose from a low of $12.78 last week to $20.65 at Monday’s close, continuing gains post-announcement.
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Treasury Details: The firm held over 102,916 ETH valued at around $434 million before the sale, ranking sixth among public Ethereum treasuries, with remaining holdings near $400 million.
ETHZilla sells ETH to fund share buybacks amid investor push—shares surge 14%. Discover how this Ethereum treasury strategy impacts shareholders and crypto investments today.
What is ETHZilla Doing with Its Ethereum Holdings?
ETHZilla, a prominent Ethereum treasury firm, has initiated sales of its ETH reserves to execute share repurchases under its authorized buyback program. This action directly addresses shareholder concerns about the stock trading at a significant discount to its net asset value. The firm announced the sale of Ethereum to buy back about $40 million in shares, with plans to continue as long as the multiple of net asset value remains below 1, aiming to enhance shareholder returns.
How Did Investor Pressure Lead to ETHZilla’s Share Buyback Decision?
Ethereum treasury firm ETHZilla experienced a notable shift following advocacy from Dimitri Semenikhin, a meme stock influencer known as Capybara Stocks. Semenikhin, who recently drove a dramatic surge in Beyond Meat shares, disclosed acquiring roughly 2.2% of ETHZilla’s shares. He highlighted the firm’s multiplier on net assets at a low of 50% during his purchase, now improved to 65-70% but still undervalued compared to peers.
In an open letter to management, Semenikhin argued that ETHZilla was underutilizing its $250 million share buyback program announced in August. He emphasized that the company should have proactively repurchased shares trading at such discounts, stating, “The company should have bought back these shares themselves.” This pressure came at a time when shares had dipped to $12.78 last week after a 1-for-10 reverse stock split intended to attract institutional investors.
According to statements from COINOTAG, Semenikhin’s involvement drew parallels to influential figures like Keith Gill in the 2021 GameStop rally. He told COINOTAG, “Treasury bets are really measured by the multiplier they have on their net assets.” His pivot from Beyond Meat, where he helped spark over 1,000% gains, positions ETHZilla as a more conservative yet opportunistic investment. Additional context from market observers notes ETHZilla’s sixth-place ranking among public Ethereum treasury firms, with pre-sale holdings of 102,916 ETH valued at $434 million.
Less than an hour after Semenikhin’s letter—posted on X as “BREAKING. This is an open letter to the management of $ETHZ” with an accompanying image—ETHZilla responded swiftly. Chairman and CEO McAndrew Rudisill stated, “We are leveraging the strength of our balance sheet, including reducing our ETH holdings, to execute share repurchases.” Post-sale, the firm reports around $400 million in ETH remaining, underscoring a strategic balance between treasury management and equity enhancement.
Frequently Asked Questions
What prompted ETHZilla to announce its ETH sales for share buybacks?
ETHZilla’s decision stemmed from an open letter by investor Dimitri Semenikhin, who holds 2.2% of shares and criticized the firm’s inaction on its $250 million buyback program. Trading at a 50% discount to net assets, shares were seen as undervalued; management responded by selling ETH to repurchase $40 million in stock, boosting immediate shareholder value.
Who are the key investors influencing ETHZilla’s strategy?
Prominent figures include Dimitri Semenikhin, the Capybara Stocks influencer with a recent 2.2% stake, and billionaire Peter Thiel, who acquired 7.5% in August via related entities. Semenikhin’s advocacy for responsible investments with asymmetric upside has amplified focus on ETHZilla’s treasury management, similar to his role in meme stock movements.
Key Takeaways
- Swift Response to Advocacy: ETHZilla acted within hours of Semenikhin’s open letter, selling ETH to buy back shares and demonstrating sensitivity to shareholder input in treasury decisions.
- Stock Recovery Trajectory: From a weekly low of $12.78 to $23.00 after hours, shares gained over 20% in five days, reflecting market approval of the buyback amid a reverse split for institutional appeal.
- Strategic Treasury Positioning: As a top Ethereum holder with $400 million remaining post-sale, ETHZilla balances crypto exposure with equity returns, urging investors to monitor ongoing repurchases for long-term value.
Conclusion
ETHZilla’s move to sell Ethereum holdings for share buybacks highlights a responsive approach to investor demands in the Ethereum treasury space. With influential backers like Semenikhin and Thiel pushing for optimized strategies, the firm addresses undervaluation while maintaining a robust $400 million ETH position. As market dynamics evolve, shareholders can anticipate continued efforts to align treasury assets with equity performance, potentially setting a model for crypto-focused public companies.
