What to know:
- ETHZilla shares fell almost 30% on Friday following a disclosure of a potential sale of up to 74.8 million convertible shares, raising fears about stock dilution.
- The company, which transitioned from biotech business 180 Life Science to a crypto treasury, possesses over $349 million in ether and $238 million in cash reserves.
- Backed by Peter Thiel and amid a rising crypto market, ETHZ’s stock declined as other market assets rose.
After the announcement, ETHZ shares slipped dramatically, leading to investor worry about dilution—a scenario where existing shares lose value as more are issued. Investors face diminishing ownership shares without a change in overall company value.
New shares will increase outstanding shares by around 46%, raising the total from 164.4 million to 239.3 million. The company will not benefit financially from these shareholder conversions.
Recently renamed to emphasize its focus on crypto treasury management, ETHZilla has reported holding 82,186 ether, valued at approximately $349 million at present market rates. This ether was accrued at an average token price of $3,806.71. The announcement promised to significantly increase share price potential before the recent slump.
Notably, Peter Thiel, a prominent supporter of Ethereum, maintains a 7.5% stake in ETHZ through his Founders Fund, which highlights growing institutional belief in Ethereum as a foundation for future financial systems.
Despite these developments, ETHZ shares have diverged from broader market trends, continuing to fall amid positive movements in the Nasdaq and S&P indexes and a rise in ether prices.
