Sharplink Gaming’s stock price plummeted by nearly 90%. This drop came on the heels of the company’s announcement to register up to 480 million shares for resale. The filing affects almost 58.7 million common shares. Unsurprisingly, investors are spooked, and this has led to an 83% drop in the company’s share price. Consensys CEO and Sharplink Gaming Chairman Joseph Lubin has clarified that the filing is a standard procedure and not an indication of actual sales.
As of 3:15 p.m. Eastern, the company’s stock price has already closed Thursday trading down 12.25% at $32.53. In after hours trading, shares deepened the rout by another 73% to go below $8 in the wake of the filing.
Filing Sparks Market Reaction
The resulting filing with the Securities and Exchange Commission (SEC) sent shockwaves of immediate market reaction. Investors took the inauspicious signal of the possible resale of so many shares as the worst kind of signal.
We agree—Charles Allen, CEO of BTCS Inc., wrote this in 2019 on how such filings typically cause a mass exodus of panic-stricken shareholders.
This creates a prisoner’s dilemma: everyone rushes to sell before the others do — a classic race to the bottom." - Charles Allen
In light of the market’s reaction, Lubin took to Twitter to clarify that some are misinterpreting the filing.
This is standard post-PIPE procedure in tradfi, not an indication of actual sales - Joseph Lubin
Matt Corva, Consensys’ general counsel, joined Lubin in that sentiment, noting that the filing does not represent any bona fide sales.
doesn’t reflect anyone’s sales, which may or may not ever happen, I have no idea. But it’s a basic filing - Matt Corva
Lubin Clarifies Intentions
Joseph Lubin took to Twitter to explain that that was not at all the intention behind the filing. He noted that neither he nor Consensys had divested any shares. The possibility that shares could be resold at a profit is connected to Consensys moving to an Ethereum-centric treasury strategy.
Lubin's clarification aimed to reassure investors that the filing is not a sign of financial distress or a lack of confidence in Sharplink Gaming's future. Rather, it is one piece of a larger strategy to fortify Consensys’ power within the Ethereum ecosystem.
Corva said in its comment announcement that the confirmation of the filing news was preemptively announced two weeks ago. That’s the implication of the market’s reaction possibly being an overreaction to stuff that was widely known already.
Potential Reversal
Even amid the latest downturn, there are signs that Sharplink Gaming might turn its losses around. Allen suggested that the firm should make a big move and publicly buy a lot of Ether (ETH) to regain investor trust.
If they played cards right would expect a surprise PR tomorrow with $1b of ETH purchases — which could light the match to reignite the stock - Charles Allen
From a strategic perspective, such a move would further fit with Consensys’ Ethereum-focused treasury strategy and signal market commitment to building on the blockchain ecosystem. Whether Sharplink Gaming goes this route is an open question.
