SharpLink Gaming: Another Overpriced Ethereum Wrapper

Summary SharpLink Gaming’s stock surge is driven solely by its Ethereum holdings, not underlying business fundamentals or revenue growth. SharpLink has aggressively raised capital to buy ETH, now holding over 280,000 ETH, with nearly all assets staked for rewards. SBET stock trades at almost 4x the value of its ETH holdings, making its valuation excessive compared to simply owning ETH or ETFs. Despite being bullish on Ethereum, I see SBET’s price as speculative and would avoid the stock at this premium to its net asset value. If it seems like every other article I’ve written in July has been about Ethereum ( ETH-USD ) treasury companies, you’ll have to forgive me; but I have more to say. Not to be forgotten, with Bit Digital ( BTBT ), BTCS Inc. ( BTCS ), and BitMine Immersion Technologies ( BMNR ) all turning into Ethereum Treasury companies this summer, SharpLink Gaming, Inc. ( SBET ) was one of the true early players in this game. In this article, we’ll look at SharpLink Gaming’s operational history, ETH holdings, and stock valuation. SharpLink Gaming Before Ethereum SBET stock has been on an incredible roller-coaster ride since the end of May: Data by YCharts After closing at $2.79 per share on May 21st, the stock absolutely exploded over $124 per share roughly one week later. This action is a perfect example of hype running into a lack of liquidity. As of the quarter ended in March, there were less than 1 million shares of SBET outstanding. There were 54.5 million shares traded during the May 27th session. And we need to be clear about this; there is absolutely nothing fundamentally driving this performance other than the company’s exposure to Ethereum. The underlying business itself is bringing minimal revenue to the table: Q1-25 Revenue (SharpLink 10-Q) Prior to becoming an Ethereum rocket ship stock, SharpLink Gaming was involved with sports betting and iGaming. For the quarter ended March, SharpLink reported just $742k in revenue – a 24% year-over-year decrease – as well as an operating loss of nearly $1 million. This was actually an improvement from the Q1-24 operating loss of $1.7 million. Q1-25 Balance Sheet (SharpLink 10-Q) At the end of March, SharpLink had roughly $1.4 million in cash, $2.8 million in total assets, $693k in total liabilities and shareholder equity of about $2.1 million. The point is, this was not a company that had much going for it and the stock price reflected that. Data by YCharts Before the company priced a $4.5 million offering in late-May, SBET shares traded at a slight discount to book value. Prior to all of the Ethereum activity, SharpLink was actually exhibiting strong revenue growth between 2021 and 2023 before falling by 26% in 2024. At this point though, the underlying business that SharpLink had been primarily operating before the late-May ETH purchases is completely immaterial to the valuation of the company’s share price going forward. Capital Raises On May 27th, SharpLink announced a $425 million Private Investment in Public Equity, or PIPE, with the expressed purpose of starting an Ethereum Treasury. The stock immediately surged 400% on the news. As part of the PIPE, the company sold 58.7 million shares at a $6.15 share price. The day before the announcement of the PIPE, CEO Rob Phythian and CFO Robert DeLucia purchased a combined $200,000 in SBET stock at a share price of $6.72. Also on May 26th, the company added Joseph Lubin to the Board of Directors and elected him Chairman of the Board. Lubin co-founded Ethereum in 2014 and is also the founder of Metamask developer ConsenSys. Given Lubin’s history with Ethereum, it is certainly not a surprise to see SharpLink opting for an ETH treasury strategy rather than Bitcoin ( BTC-USD ) or Solana ( SOL-USD ); each of which has seen growing balance sheet interest at the corporate level. Subsequent to the PIPE, SharpLink has also commenced a $1 billion ATM to purchase more ETH. At several points over the last few weeks, SharpLink has tapped that ATM to buy Ethereum. On July 17th, the company disclosed an additional $5 billion ATM to bring the aggregate ATM offering to $6 billion. In the prospectus, SharpLink disclosed 40.5 million shares of common stock sold through the $1 billion ATM for gross proceeds of $721 million. Ethereum Holdings vs. Valuation By my back of the envelope math, after the PIPE and shares issued through the ATM, there are roughly 100 million SBET shares outstanding as of July 17th. At a closing share price of $36.40 on that same date, SharpLink has an estimated market capitalization of a little over $3.6 billion. Top ETH Holders, 7/17/25 ( strategicethreserve.xyz ) On July 15th, SharpLink touted the largest corporate Ethereum stack at 280,706 ETH. The company’s reign at the top was short-lived, as BitMine Immersion disclosed over 300k ETH two days later. Assuming SBET still has 280.7k ETH as of July 17th, the market value of those coins is a hair over $1 billion. Thus, SBET holders are paying nearly 4x the value of the ETH held by the company. To be sure, the company is staking its assets. Per the July 17th prospectus, 99.7% of SharpLink’s ETH is staked and generating rewards. ETH Staking, 1yr ( stakingrewards.com ) The question is, how much should SBET shareholders pay for a company that is generating 3% APY on staked assets? I don’t think nearly 4x the underlying is the right price. Perhaps the enthusiasm is more about the potential price performance of ETH than the potential rewards from staking? In which case, SBET makes little sense against simply buying spot ETFs. Sure, you miss out on staking rewards through an ETF (for now), but you also don’t have to pay $36 for about $10 of staked ETH. Closing Points I don’t want to come off as a total curmudgeon in this piece. I’m actually bullish on ETH long term and see the passing of the GENIUS Act by the United States Congress as a big win for Ethereum and smart contract chains alike. That said, I think the action that we’re seeing in the public equity markets is concerning, and it reminds me of the 2017 crypto run a great deal. Back then, nano-cap parabolas were achieved by simply putting ‘blockchain’ in the corporate name. This time around, mentioning a ‘digital asset treasury’ strategy in a press release opens the door to an ATM. In my view, this is late-cycle behavior and a decent reason to resist FOMO in both crypto and crypto-adjacent equities. I’m told it is different this time. But I’m not so sure about that. For me, the play is simple: If you like ETH, buy ETH. SBET is not a stock I would personally buy at nearly 4x NAV.

Source: Seeking Alpha