TLDR
- Bernstein initiated coverage of SharpLink Gaming with an outperform rating and $24 price target, representing 75% upside from current levels
- The company holds 859,400 Ethereum worth approximately $12.65 billion, representing 0.7% of total ETH supply
- Analysts expect SharpLink to benefit from lower interest rates making ether staking yields around 2.5% more attractive
- SharpLink plans to deploy $200 million in ether on Consensys’ Linea network over multiple years to generate enhanced yield
- Bernstein projects Ethereum-based assets could grow from $172 billion to $5 trillion by 2035, with ETH reaching $15,000 by 2030
SharpLink Gaming shares traded around $13.65 in early Thursday trading after Bernstein initiated coverage with an outperform rating. The Wall Street firm set a $24 price target on the stock.
That target represents roughly 75% upside from current levels. The company operates as an Ethereum treasury vehicle for institutional investors.
SharpLink currently owns 859,400 Ethereum tokens valued at approximately $12.65 billion. This represents 0.7% of the total ETH supply.
The shares hit a peak of $124.12 earlier this year before declining to current levels. Bernstein analysts led by Gautam Chhugani published their coverage report on Thursday morning.
The firm operates similarly to Strategy, which holds Bitcoin as a treasury asset. SharpLink focuses on growing its Ethereum holdings per diluted share to maximize shareholder value.
Ethereum’s staking mechanism allows the network to generate native yields. Current staking yields sit around 2.5% annually.
Bernstein expects lower interest rates to increase investor demand for these yields. The Federal Reserve has begun cutting borrowing costs from elevated levels.
Management and Ecosystem Ties
SharpLink’s leadership includes Chairman Joseph Lubin, who co-founded Ethereum. Lubin also created Consensys, the company behind MetaMask wallet.
The analysts described the management team as strongly aligned with the Ethereum ecosystem. This week SharpLink announced plans to deploy $200 million worth of its holdings.
The deployment will take place on Linea, an Ethereum layer-2 network created by Consensys. The move aims to generate enhanced yield through multiple sources.
SharpLink will use Anchorage custody with ether.fi and EigenCloud. The strategy includes earning rewards through a process called restaking.
Bernstein believes this approach could enable more sustainable economics. The firm may gain greater ability to tap institutional debt and equity markets.
Valuation and Premium
The investment firm said SharpLink deserves a 15% premium to its ether holdings. This reflects a projected 3.4% annual yield and strategic positioning.
That premium calculation includes 2.4% yield from Ethereum staking. An additional 1% comes from leverage and share purchases.
Current trading shows SharpLink at an mNAV of 0.88 according to Strategic Ethereum Reserve. This means the stock trades at a 19% discount to its crypto holdings.
Most treasury firms grow their holdings by issuing common equity when shares trade at a premium. This tool hasn’t been consistently available to SharpLink given its discount.
The premium metric reflects investor confidence in a company’s strategy execution. Some view it as faith in management’s vision.
Ethereum Growth Projections
Bernstein projects Ethereum-based assets will grow from $172 billion today to $5 trillion by 2035. The firm expects ETH prices to exceed $15,000 by 2030.
The analysts view Ethereum as ideal for digital asset treasury strategies. They cited the asset’s robust liquidity and native staking capabilities.
Ethereum’s yield opportunities allow treasury models to build operating earnings. This comes from the core strategy beyond just market-funded acquisitions.
The firm acknowledged market sentiment could cause fluctuations in SharpLink’s share price. Results may be irrelevant if broader market conditions shift.
SharpLink’s shares recently changed hands around $13.08 according to Yahoo Finance.
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