Shares of the Ethereum treasury firm ETHZilla (ETHZ) experienced a 14% surge this Monday. This move occurred after the company announced a significant $40 million ETHZilla share buyback. The decision was driven by an open letter from influential investor Dimitri “Capybara Stocks” Semenikhin.
The controversy began when Semenikhin, known for his influence on the Beyond Meat surge, revealed his 2.2% purchase of ETHZ. The investor criticized that the shares were trading at an extreme discount (50% of their net asset value). Semenikhin urged management to sell part of the ETH treasury to fund the ETHZilla share buyback. Surprisingly, the response was almost immediate. Less than an hour after the public letter, ETHZilla confirmed the sale of ETH to repurchase $40 million in shares.
Semenikhin’s pressure highlighted a disconnect in ETHZilla’s valuation. The investor noted that the firm was underutilizing its buyback program authorized in August for $250 million. At the time, the shares were trading far below the real value of their liquid assets. The firm, which held 102,916 ETH (valued at $434 million), now reduces its holdings to stabilize the price. ETHZilla had also recently completed a 1-for-10 reverse split to attract institutional investors.
Is ETHZilla Setting a New Trend for Crypto Treasuries?
The market reaction was notable. ETHZ shares, which fell to $12.78 last week, closed Monday at $20.65. They even continued to rise to $23.00 in after-hours trading. McAndrew Rudisill, CEO of ETHZilla, stated that they are leveraging the strength of their balance sheet to execute the buybacks. This event demonstrates how companies with large cryptocurrency treasuries can be influenced by activist investors. Furthermore, it sets a precedent for using digital assets to manage stock value.
The ETHZilla situation remains dynamic following Semenikhin’s intervention. Although the ETHZilla share buyback stabilized the price, the market will watch if the firm continues to sell ETH. The company, which still holds nearly $400 million in Ethereum, also has the backing of billionaire Peter Thiel. Investors are now evaluating whether this move is a short-term correction or the start of a new asset valuation strategy.
