TLDR
- FG Nexus sold 10,922 ETH worth approximately $33 million to fund a stock buyback program
- The company borrowed an additional $10 million to repurchase 3.4 million shares at $3.45 each, 8% of outstanding float
- FGNX stock trades below its net asset value of $3.94 per share, down 95% from summer peak
- FG Nexus now holds around 40,000 ETH plus $37 million in cash and USDC stablecoin
- ETHZilla previously sold $40 million in tokens last month for similar share repurchase purposes
FG Nexus disclosed Thursday it sold a portion of its Ethereum holdings to fund a share buyback. The digital asset treasury company offloaded 10,922 ETH to support its stock price.
The firm combined proceeds from the ETH sale with $10 million in borrowed funds. This gave FG Nexus roughly $43 million to execute its repurchase program.
The company bought back 3.4 million shares at an average price of $3.45 per share. This represents about 8% of the outstanding float.
The buyback price sits well below the company’s reported net asset value of $3.94 per share. This gap between stock price and NAV has created pressure on digital asset treasury firms.
FGNX shares remain down more than 95% from their peak last summer. The stock traded up 2% in early Thursday trading following the announcement.
FG Nexus now holds approximately 40,000 ETH on its balance sheet. The company also maintains $37 million in cash and USDC stablecoin.
Market Reaction to ETH Sales
Ethereum prices dropped about 2% immediately following the news. Bitcoin also slipped roughly 1% in sympathy with the ETH move.
Both cryptocurrencies have since recovered some of those losses. The selling pressure from treasury companies appears to create temporary price dips.
The move follows a similar action by competitor ETHZilla last month. That company sold approximately $40 million worth of tokens to fund its own share repurchases.
Digital asset treasury companies face a common problem. Many trade at stock prices far below the value of crypto they hold.
This dynamic has pushed several firms to sell holdings to buy back shares. The strategy aims to reduce share count and boost per-share metrics.
Company Strategy Going Forward
CEO Kyle Cerminara outlined the company’s plan in a statement. FG Nexus intends to continue repurchasing shares while trading below NAV.
The company believes this creates an “increasingly asymptotic effect” on valuation metrics. As share count declines, net asset value per share should rise.
The approach raises questions about long-term sustainability. Selling core crypto assets to support stock prices depletes the very holdings that give these companies value.
Some digital asset treasury firms have seen stock declines of 50% to 98%. Many now trade at levels far below their crypto holdings’ worth.
The trend shows growing stress in the digital asset treasury sector. Companies built to hold crypto are now selling it to prop up their stock prices.
FG Nexus maintains a focus on Ethereum as its primary treasury asset. The company used proceeds from selling roughly one-fifth of its total ETH position for the buyback.
The firm borrowed $10 million to supplement the crypto sale proceeds. This leverage adds another layer of financial complexity to the treasury company model.
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