Slivergate Stock Rating Downgraded by Morgan Stanley Analayst

• Does Silvergate have direct exposure with BlockFi? 

Fear in the crypto sector has arisen after the crash of FTX, and some particular crypto-related firms and lenders are on the brink of filing for bankruptcy. It is important to note that BlockFi is in great trouble because of the FTX collapse. 

In a research report on Monday, November 5, 2022, Morgan Stanley noted that risk has increased for Silvergate Capital. Manan Gosalia analyst at Morgan Stanley downgraded the Silvergate from equal weight to underweight because of its ongoing stress in the crypto market.

Several analysts believe that Silvergate has indirect exposure with collapsed FTX exchanges, but it does not have any direct exposure and has clarified it several times. 

Sliveragate Stock Price

While writing this article, the stock price of Silvergate is trading at $24.24 with a market cap of 767.405M, and this is the lowest price of Silvergate stock in the last year as per data, the all-time high of stock was around 219.75 in November 2021.  

According to the market analyst, the prices of Silvergate could reach as high as $150 in the upcoming year, and if the prices continue to decrease, it could trade as low as $24.00. 

The estimated EPS(Earning Per Share) of Silvergate was higher than the estimated earnings in the first and second quarters of 2022, which was a positive symbol for the stocks of Silvergate. But in the third quarter, the reported earnings of Silvergate stock were quite low compared to the estimated earnings, which is a negative symbol for the company’s stocks. 

Analysts believe it’s time to strongly buy the stocks of Silvergate because it may rise in the upcoming six months, and the prices could reach $150. 

Does Silvergate have Exposure With FTX and BlockFi?

Silvergate Capital highlighted its exposure on FTX in its press release after it became clear that the exchange was on the brink of filing for bankruptcy. 

In Silvergate’s press release Alan Lane, Chief Executive Officer of the company, noted that “Total deposits from all digital asset customers totalled $11.9 billion, of which FTX represented less than 10%.” 

Lane futhure stated, “The firm did not have any outstanding loans nor Leverage in FTX; total deposits from all digital asset customers totalled $11.9 billion, of which FTX represented less than 10%.”

Concluding his statement, Lane quoted that “To date, all SEN Leverage loans have continued to perform as expected with zero losses and no forced liquidations.”

Silvergate also notes that Bitcoin collateralized all its leverage loans, and the bank did not issue any unsecured loans. 

On November 28, TheCoinRepublic reported that Silvergate publicized a business update quoting that the deposit relationship of the company with BlockFi is restricted to less than $20 million of its entire deposits from all digital asset customers.” As per the company’s revenue report, those deposits are estimated at $13.2 billion in quarter three. 

It also mentioned that BlockFi wasn’t a custodian for its Bitcoin-collateralized leverage loans, and the company has no capital in BlockFi.

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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