Summary SharpLink Gaming trades below its ETH-derived net asset value, implying material upside to fair value. The company’s ETH concentration is rising faster than its share dilution, lifting ETH per share. Management accesses enhanced multi-year staking yields unavailable to retail or ETFs. SharpLink can issue shares above NAV and repurchase below NAV, supporting long-term NAV growth. ETH volatility, dilution, and reliance on capital markets remain the primary risks. Investment Thesis I assign SharpLink Gaming ( SBET ) a buy rating because the stock trades at a discount relative to the value of its Ethereum treasury, with a potential 24.5% upside to its fair value estimate of $12.55 per share. The company has expanded its ETH concentration, management can secure yield opportunities from its ETH staking that are unavailable to retail or ETFs, and the company is positioning itself as a direct beneficiary of Ethereum's accelerating institutional adoption. Management's ability to issue shares above NAV, repurchase shares below NAV, and its access to multi-year staking initiatives also give the company a versatility to grow its ETH per share over time using multiple levers. Dilution and ETH volatility are, of course, ongoing risks, but these risks have been factored into its valuation given below, and, at today's price, the company offers investors an undervalued proxy for ETH that is also displaying improving fundamentals. Background My last article was on Ethereum , and one of my recent followers asked me what my take was on SharpLink Gaming. I wasn't quite sure what my take was at the time, so I didn't want to give a rushed answer and replied that I would do a piece on the company shortly. Hence, this article serves as my reply to his comment. Reader Question and My Reply (Seeking Alpha) Business Overview According to the company's latest investor presentation and the company's latest 10-Q , SharpLink Gaming is a two-segment company whose primary line of operation revolves around an Ethereum-based treasury management strategy. As of June 2025, the company adopted ETH as its primary treasury asset, and the company, in essence, raises cash by selling new shares through PIPE placements, public offerings, and ATM shares, and uses that cash to buy and expand their ETH holdings. And this treasury strategy is now their predominant line of business that has established the company as the second largest corporate ETH treasury available to trade on the public market. SharpLink’s ETH Treasury Platform (SharpLink Gaming's Latest Investor Presentation) The company's ETH Treasury Management segment generates revenue by putting its ETH to work using two methods: first, using native staking, where the company stakes its ETH directly on the Ethereum network and, therefore, helps to secure the blockchain and earns protocol rewards in return, and, second, using liquid staking, where the company deposits its ETH with a staking provider in exchange for a token—LsETH—that continues to earn rewards but still remains usable in other digital asset markets. What both of these approaches allow the company to do is to allow them to earn continuous ETH-denominated income and restake these earned rewards to compound their growth over time. The company's second segment, affiliate marketing, provides both customer-acquisition and performance-marketing services to both sportsbook and online casino operators but is a much smaller revenue segment than their ETH treasury and does not drive overall company performance. Latest Quarterly Results and Critical Financials Per the latest 10-Q released two weeks ago, the company had 580,841 ETH, split between their crypto assets at fair value totaling $2.41 billion and their crypto assets at cost totaling $623 million—the difference being that their ETH held directly is marked to market each quarter under GAAP while their ETH staked through a liquid-staking protocol is recorded as LsETH at cost and, therefore, cannot be written up even if the market value rises; this is now the core economic engine of the business. Meanwhile, the company's cash and USDC, together, total roughly $37.8 million that provide both near-term liquidity for operations and a continued deployment of ETH. Q3 Balance Sheet (SharpLink Gaming 10-Q) Meanwhile, the company's liabilities remain modest at a rounded $4.6 million, which looks great on paper but is almost entirely the result of the company's continuous issuance of equity, as seen in the YCharts below, as opposed to cash generation. This massive issuance of new shares is reflected in their additional paid-in capital [APIC] that rose from $79.9 million to a whopping $3.18 billion in nine months—money that the company used to accumulate ETH—and common shares outstanding rose from 407,295 to its current 196,693,191. However, I do want to make a brief note that, back in August , the company did announce a $1.5 billion share buyback program and has begun to utilize it ; they've repurchased 939,000 shares at an average price of $15.98, and it signals management's willingness to support the stock when it trades below NAV. Data by YCharts As for income, the company generated approximately $10.3 million in staking revenue and $2 million from affiliate marketing, bringing their total revenues and gains from operations to $12.28 million. But the real driver of their revenue is to be found under their 'other operating income' category, where the company had $104.9 million of unrealized gains on ETH, along with $11.7 million in realized gains that, together, produced $116.6 million of total operating income. All this revenue together offset the company's operating expenses of $128.3 million, bringing the company's operating income to approximately $615,000 for the quarter. Q3 Income Statement (SharpLink Gaming) Meanwhile, the company's financing activities generated $2.92 billion from the above-mentioned PIPE placements, public offerings, and ATM shares, of which they spent a rounded $2.54 billion purchasing crypto assets. As for the company's cash flow, the net cash used in the company's operations totaled $8.4 million. Overall, the company's economics, as illustrated from this quarterly report, tell us investors that this is a company tied to its ETH-appreciation and ETH yield supported by continual access to equity capital and whose holdings have grown to a value that is far larger than the equity used to buy them, thereby amplifying the company's gains and losses without needing to take out debt. Growth Drivers & Catalysts There are three categories that serve as catalysts for SharpLink going forward: macro-Ethereum tailwinds, strategic deployment of its ETH treasury, and levers from capital markets that directly increase the company's ETH per share. Ethereum Macro Tailwinds The company, by default, is tied to the same structural forces that drive Ethereum's growth. Some of these structural forces were mentioned in SharpLink's latest earnings call , and I'll go ahead and mention what I think are the most important for the company going forward: Institutional adoption of Ethereum is now accelerating thanks to regulatory clarity brought on by the SEC's " Project Crypto ," which has the underlying plan to make the United States the "crypto capital of the world" and is designed to attract crypto business and to accelerate developments in Ethereum. There are also the CLARITY and GENIUS Acts that have legitimized institutional staking and that have unlocked $43.7 billion in on-chain capital; major financial institutions onboarding Ethereum, such as JPMorgan's announcement that they will allow institutional clients to use their Ether holdings as collateral for loans; and SWIFT, the current backbone for global payments, is building its ledger using Linea—Consensys' Layer 2 Ethereum technology. Major Ethereum Adoption Catalysts (SharpLink Gaming's Latest Investor Presentation) And we can't forget the upcoming Fusaka upgrade, which I wrote about in detail in my previous Ethereum article , that will increase throughput and reduce rollup settlement costs by around 15% to 40%. All of these dynamics combined increase staking demand, ETH burn, and settlement volume, thereby strengthening ETH's monetary profile and, thereby, lifting the value of the company's treasury. Treasury Development and Yield Generation Company management has staked nearly 100% of its ETH and, due to the large amount of ETH the company is holding, can access special yield deals that normal ETH investors or even ETFs cannot get; the $200 million deployment to Linea is the best example of this: it's a multi-year commitment that, in essence, pays higher rewards than standard ETH staking while safely keeping the assets at Anchorage Digital Bank. In the latest earnings call , management stated that they are looking for more opportunities to boost their rewards from staking. In the words of Co-Chief Executive Officer Joseph Chalom: When we approach the ecosystem and are willing to provide multiyear commitments, we are seeing that they [ecosystem protocols and platforms such as Linea] are very eager to provide enhanced incentives for that locked TVL or total value locked. So we're still surveying. You will see, I believe, additional announcements later this quarter and in quarter 2. But we're viewing it essentially as a portfolio of staking. And as an institutional investor and steward, we are looking at the efficient frontier of opportunities. And, since June, management also noted in their latest earnings call that its internal "ETH concentration" has risen from two to four, which basically means that the company is adding ETH to its treasury faster than it is issuing new shares based on a calculation using the company's own proprietary metric . All that to say, the company is growing faster than its dilution, which, in turn, supports the value of each share even as the company continues to raise capital. SharpLink Yield Advantage (SharpLink Gaming's Latest Investor Presentation) Capital Markets Catalysts SharpLink is currently managing its stock price relative to the value of its ETH holdings. For example, when shares trade above the value of the ETH that backs each share, the company issues stock and uses the proceeds to buy more ETH that, thereby, increases the amount of ETH behind each share. And when shares trade below that value, SharpLink can buy back its stock, borrow against their ETH, or even use structured financing to benefit from ETH's volatility. But all three approaches have one thing in common: they are designed to keep raising ETH per share over time. And, once again, per the company's latest earnings call, SharpLink is planning to tokenize its equity on Ethereum, thereby making the stock easier to trade and to integrate into on-chain finance. As Joseph Chalom put it in the call: In September, we announced a partnership with Superstate, a digital transfer agency to become the first public company to natively issue its stock on Ethereum. The intent of this innovative partnership is to increase both accessibility and on-chain utility of our public equity for the new digitally native investor base. All together, these tools give management multiple ways to keep expanding the company's ETH per share over the long-term. Valuation To value SharpLink, we must calculate how much ETH the company owns, divide it by a realistic share count, and make a small adjustment based off management's current execution strategy: Based off the latest 10-Q, the company holds 861,251 ETH. Using ETH's rounded price of $3,000, we find that the total value of the company's treasury is approximately $2.58 billion. The company also has 196.7 million shares outstanding, but we cannot ignore the warrants, stock options, and other instruments that could potentially convert. Thus, a more reasonable diluted estimate is 226.2 million shares. Dividing the company's ETH value by this diluted shares estimate gives us a NAV per share of $11.41. Data by YCharts The next step is to figure out whether the company deserves a premium or a discount, and I believe they deserve a modest premium for three reasons—all of which have already been mentioned above: The company's ETH concentration has doubled since June. The company can access multi-year staking deals unavailable to retail or ETFs. Management can raise capital at a premium and repurchase stock when it trades below NAV. I think these three make for good advantages, but justify only a limited markup, and, hence, I will assign a premium of 10%. Thus: Fair Value = $11.41 x 1.10 = $12.55 per share Since SharpLink currently trades at $10.08, this implies an upside of 24.5% to its fair value and, thus, makes the company an undervalued ETH proxy with growing value from its staking deals and capital strategy. Thesis Risks There are quite a number of risks for the company, and I'll briefly mention five. The first risk that is the most obvious, at least to me, is ETH price volatility. Since virtually all of the company's economic value comes from its Ethereum holdings, a continuous decline in ETH (keep in mind that Ethereum is down 12% YTD) reduces the company's NAV per share and could overwhelm any gains that are made from its staking or its treasury management. The second risk, and another obvious one, is ongoing dilution. SharpLink's business model relies on issuing new shares to fund ETH purchases, and, while management has shown, per the latest earnings call, an ability to grow ETH per share, this is not guaranteed. For example, if future capital raises occur at lower prices, or suppose warrant exercises accelerate, shareholders could face future decline in ETH per share. A third risk is the company's inherent dependence on capital markets; what I mean by this is that SharpLink's strategy works best when the company is trading above NAV because it allows them to issue new shares at a higher price than what the value of each share is actually worth, thus enabling the new capital to lift ETH per share instead of diluting it (i.e., accretive issuance). But this leaves the company open to the market going risk-off, and if market sentiment toward crypto weakens, then this means that the company could lose access to attractive financing and limit its ability to expand its treasury or even to secure new staking deals. A fourth risk is SharpLink's reliance on outside custodians and staking partners to generate its higher ETH yields. This, in essence, introduces outside risks such as, for example, Anchorage or a staking provider facing operational problems, or a hack, or something of the sort that is outside of SharpLink's control. The company also makes multi-year commitments, which essentially means that the company cannot move ETH quickly should there be market stress. And, last, there is always the possibility of regulatory risk. Any changes to staking rules or digital asset classification could always disrupt the company's business model. Conclusion & Investor Takeaway The company has a simple business model: convert its capital into ETH, compound that capital through staking, and raise its ETH per share over time. And, at the end of the day, I think a case for an investment in SharpLink comes down to one simple question: How much are investors paying for each dollar of ETH exposure the company controls? The market is currently valuing the company at a discount relative to its NAV per share of $11.41 and a further discount to its fair value of $12.55 when factoring in a growing ETH concentration, access to unique staking opportunities, and a structured handling of its issuance and buybacks around NAV. Of course, none of this removes the company's risks tied to its ETH volatility, dilution, and its overdependence on capital market conditions, but it seems that the market price for the stock is already reflecting those pressures. Thus, in sum, for any investors who are looking for an ETH proxy on the public market with the potential for additional upside from staking deals and strategic capital management, SharpLink offers a discounted, but still compelling, entry point. Therefore, I maintain a buy rating given an estimated upside of 24.5% from the company's current stock price.
