SharpLink Gaming (SBET) shares experienced a significant drop, with prices sinking by over 10%. The decline followed the company's announcement of a $103 million net loss for the second quarter of 2025. This loss contrasts sharply with the $0.5 million loss reported during the same period last year. The primary driver behind this downturn is a non-cash impairment charge of $87.8 million related to the company's holdings of liquid staked Ether (LSETH).
The impairment charge stems from U.S. Generally Accepted Accounting Principles (GAAP), which require companies to recognize the lowest price of an asset during the quarter. During Q2 2025, the lowest price of one LsETH was approximately $2,300. Although LSETH has since recovered to trade at a premium of $4,865.39, accounting rules mandated that SharpLink record the impairment based on the lowest price during the period. This resulted in a substantial write-down of the carrying value of LsETH holdings to $382.4 million as of June 30, 2025.
SharpLink clarified that this impairment is a non-cash charge and does not represent an actual loss of assets or a sale of ETH. The company has not sold or redeemed any of its LSETH assets, and its treasury remains fully staked. As of Q2 2025, SharpLink holds a total of 728,804 ETH, making it the second-largest corporate holder of Ether among publicly traded companies, only surpassed by BitMine.
Despite the impairment charge, SharpLink continues to expand its ETH treasury. On August 15, 2025, the company made its largest single ETH purchase to date, adding 129,700 ETH. Nearly 100% of the ETH held by SharpLink is staked, generating cumulative rewards of 1,326 ETH to date.
In addition to the crypto impairment loss, SharpLink's Q2 financial results revealed a decline in operational performance. The company reported revenue of $0.7 million, down from $1 million in Q2 2024. Gross profit was $0.2 million, or 30% of revenue, compared to $0.3 million, or 28.5% in the prior year. Operating expenses increased to $2.3 million, versus $1.5 million in Q2 2024. The company's net loss for the first half of 2025 was $104.4 million, compared to net income of $11.9 million in the first half of 2024.
The market reacted negatively to the earnings announcement, with SharpLink's stock price dropping by approximately 12%. The loss per share came in at $0.12, slightly higher than the $0.11 per share loss analysts had predicted. The stock decline reflects the sensitivity of public markets to non-cash accounting items, particularly for companies with significant exposure to digital assets.
Despite the challenges, SharpLink's chairman of the board, Joseph Lubin, remains optimistic about the company's future. He emphasized Ethereum's role as the trust layer for the decentralized economy and highlighted SharpLink's aggressive accumulation, staking, and strategic management of ETH. Lubin believes that SharpLink is actively compounding value for its stockholders through yield generation and intelligent capital deployment.
