SharpLink Gaming Ltd. (NASDAQ: SBET) stock witnessed a sharp 73% decline in the Thursday after-hours trading session, following the company’s filing of a prospectus that allows the resale of securities through public or private transactions.
While various investors and market experts interpreted the filing as a part of SharpLink’s plans to establish the world’s largest publicly traded Ethereum reserve by selling all the shares, the firm’s chairman, Joseph Lubin, stated that the market watchers had misinterpreted it.
SharpLink’s SEC Filing Creates FUD in SBET’s Market
SBET was closed at $37.07 per share on June 11, and within hours, it started draining, closing below $8 on June 12th. It is now recovering from the sell-offs. While the market watchers link the FUD (Fear, Uncertainty, and Doubt) to SharpLink’s SEC filing, others have different opinions.
Chairman Lubin also clarified that neither he nor the prominent investors have sold any shares. He considers both the SEC filing and the Ethereum reserve plan as distinct events, and frames the online speculations and media-based FUD as the primary reasons for the downtrend.
Experts Ask How a Two-Week Earlier Announcement Creates Market FUD Now
The SEC filing was revealed on May 30, 2025, 13 days before the market plunge. Experts wonder how this is connected to the current FUD. According to SharpLink’s partner company Consenys’s general counsel Matt Corva, the filing doesn’t directly reflect anyone’s sales, which may or may not ever happen. He added that it is just a basic filing. Various experts also expressed that the media might have misread the document to create FUD, thinking this was all new dilution.
Jonny Moe, a prominent crypto trader, stated that nobody currently loves the dilution of 10 million shares into 59 million, but he believes that it did not seem worth a 75% drop on a stock that everyone already knew would likely use dilution to raise funds to buy Ethereum, as they had previously stated.
Various Market Watchers Connect the Filing to SharpLink’s $1B Ethereum Reserve
The plan to create an Ethereum Reserve was announced by SharpLink’s CEO, Rob Phythian, on June 2nd, three days after the SEC filing. It had already raised more than 400 million dollars to fund the reserve, with robust backing from Consensys and other prominent firms.
The plan mirrors Strategy’s (previously MicroStrategy) Bitcoin and Ethereum reserves, and the choice of ETH was primarily due to its growing acceptance in traditional finance. However, traders have consciously or unconsciously connected the reserve plans to the SEC filing, contributing to the downfall.
SharpLink’s S-3 Filing Details
SharpLink’s S-3 filing is a standard form by the Securities and Exchange Commission that allows the registration of securities, and it clearly states that it permits the stockholders to resell up to 58,699,760 shares and purchase up to 10,400,553 shares. The total distribution of common shares is outlined below.
- 58,699,760 Shares of Common Stock
- 10,400,553 Pre-Funded Warrants to Purchase up to 10,400,553 Shares of Common Stock
- 10,400,553 Shares of Common Stock Underlying Pre-Funded Warrants
- 3,455,019 Strategic Advisor Warrants to Purchase up to 3,455,019 Shares of Common Stock
- 3,455,019 Shares of Common Stock Underlying Strategic Advisor Warrants
- 2,764,013 Placement Agent Warrants to Purchase up to 2,764,013 Shares of Common Stock
- 2,764,013 Shares of Common Stock Underlying Placement Agent Warrants
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About SharpLink Gaming
SharpLink is an online performance marketing company that focuses on the gaming industry. It provides various marketing solutions to its sports and casino partners and has been an active participant in the blockchain industry.
SharpLink is one of the first NASDAQ-listed companies to make an ETH-based reserve as its primary treasury. While the stock (SBET) in currency is in a downtrend, it is expected to boom shortly.