"Pharma bro" Martin Shkreli has set his sights on a sports-betting marketing company, SharpLink Gaming. The play comes after SharpLink announced a funding round to acquire cryptocurrencies. As a new crypto stock, SBET has rocketed more than 1000% this week.
SharpLink Gaming on Tuesday announced a deal to raise $425 million to build an ethereum treasury. The company is offering 69.1 million shares of common stock in a private investment in public equity (PIPE) round at a price of $6.15 per share. SharpLink plans to use the funds to acquire ETH, the native token for the ethereum network and the world's second-largest crypto behind bitcoin. The deal was expected to close "on or around" Thursday.
The move is similar to other public firms shifting to a crypto holding strategy. Michael Saylor's Strategy is buying up billions in bitcoin. Smaller players, such as GameStop, are also starting to amass their own bitcoin holdings.
Ethereum has rallied more than 40% over the past month and hit a May peak around $2,785 on Thursday. ETH is trading around February highs, but still well below its November 2021 record above $4,800.
Shkreli's Short Squeeze
Shkreli in a Thursday social media post said that the float for SharpLink is less than 2 million shares. He added that the 69 million shares issued are subject to a registration agreement, which prevents trading of the new shares for months. With only 2 million shares available to trade, Shkreli estimates the tradable market cap is effectively around $130 million.
He added that SBET stock "may go to 500-1000," but said that he "bought small." Shkreli, who rose to infamy in his former role as CEO of Turing Pharmaceuticals, warned investors "do not buy."
In a follow-up post, Shkreli jokingly pleaded with Robinhood CEO Vlad Tenev to not take away his ability to trade on this "moass," which is Wall Street Bets talk for Mother of All Short Squeezes.
SharpLink Gaming had a short interest of 383,715 on April 30 with an average daily share volume of 1.296 million, according to Nasdaq. That declined to a short interest of 20,442 on an average daily share volume of 295,117 as of May 15.
In 2015, Shkreli obtained the production license for Daraprim, a treatment for AIDS, and raised the price to insurance companies to $750 per pill from $13.50 per pill. In 2017, he was convicted on two counts of securities fraud and on one count of conspiracy to commit fraud. The court ordered him to pay $7.4 million in fines along with a seven-year prison sentence. Another case, a civil antitrust court judgment, ordered Shkreli to pay another $64.6 million to victims.
Shkreli was released in May 2022. He is permanently banned from serving as an officer for any public company.
SBET, Betting Stocks
SharpLink Gaming rallied more than 40% early Friday but reversed for a 3.2% decline. SBET stock vaulted 1,078% on Thursday on a 7,200% spike in volume.
Shkreli's first post about SBET was at 3:03 p.m. ET on Thursday, less than an hour before the closing bell.
Shares of fellow internet gaming and betting company Rush Street Interactive have advanced more than 7% this week. RSI stock recently regained support along its 50-day and 200-day lines. Rush Street eased 1.2% Friday.
Similarly, Sportradar Group is trading along support at its 21-day exponential moving average and holding above its 50-day line. SRAD stock is near its four-year high of 25.85 from April 22.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
