Bernstein has initiated coverage of SharpLink with an “Outperform” rating and a 75% upside potential. The peculiarity of this company is that it holds its cash in the cryptocurrency Ether (ETH), creating a close correlation between its share price and the value of ETH. This situation creates a scenario in which fluctuations in the cryptocurrency directly impact the company’s financial position.
Bernstein’s analysis underscores the need for transparency regarding how SharpLink manages its cryptocurrency reserves. Investors need clear information on storage methods, hedging strategies and potential sale plans. This initial valuation could significantly increase trading volume, causing the share price to react more sensitively to news related to Ether.
Implications and challenges for different stakeholders
The impact extends to various stakeholders. Equity investors will need to update their models to include ETH reserves. SharpLink’s finance team faces the challenge of protecting itself against potential declines in the value of Ether that could thwart the projected upside potential. Meanwhile, derivatives desks could see increased demand for both options on the stock and ETH futures. At the same time, the board of directors and auditors must ensure transparent custody, clear liquidity rules and defined limits on the risk associated with cryptocurrencies.
The 75% revaluation target will depend both on the evolution of ETH’s price and on how SharpLink manages its cryptocurrency reserves. Until the company publishes new financial data or adopts an updated treasury policy, the market will remain attentive to Ether’s fluctuations as the main indicator.
Bernstein’s initial assessment sets an important benchmark, suggesting that the 75% upside potential will materialize if the price of Ether rises and the company manages its reserves appropriately. Until updates are released, any announcements regarding treasury policy and the percentage of cash held in ETH will be particularly relevant to investors.
