Why Silvergate Capital Stock is falling today

What happened

Shares of Silvergate Capital Corporation (NYSE:IF), a cryptocurrency bank, fell this morning after the company reported worse than expected fourth quarter results.

The company’s stock price was down 18.9% at 11:40 a.m. ET.

So what

Silvergate Capital reported fourth-quarter diluted earnings per share of $0.66, which beat analysts’ consensus estimate of $0.72 per share.

Image source: Getty Images.

Despite the profit loss, Silvergate CEO Alan Lane was positive about the fourth quarter and full year 2021 results.

“2021 has been another year of significant growth and momentum for Silvergate, driven by strong demand for our digital currency solutions,” he said in a press release.

Lane highlighted the fact that Silvergate’s net income for the year 2021 more than tripled from the previous year, and total deposits reached $14.3 billion, a 175% increase in one year to the next. The company also significantly increased the client commission revenue it collects by approximately 175% from the prior year quarter.

Now what

Of course, investors don’t like to see a company miss analysts’ earnings estimates. But what could add to the stock’s decline today is that Silvergate’s share price has already been volatile over the past few months. The company’s stock price is down 30% in the past three months.

Any business related to the cryptocurrency market is likely to experience large swings with its stock price. Silvergate was already seeing this volatility before reporting its fourth quarter results and feeling it even more after missing Wall Street earnings estimates.

However, long-term investors may want to put the current decline in stock prices into context and understand that sometimes companies miss analysts’ projections. A disappointing quarter does not mean that you should immediately sell your shares.

10 stocks we like better than Silvergate Capital Corporation
When our award-winning team of analysts have stock advice, it can pay to listen. After all, the newsletter they’ve been putting out for over a decade, Motley Fool Equity Advisor, tripled the market.*

They just revealed what they think are the ten best stocks investors can buy right now…and Silvergate Capital Corporation wasn’t one of them! That’s right – they think these 10 stocks are even better buys.

View all 10 stocks

* Portfolio Advisor Returns as of January 10, 2022

Chris Neiger has no position in the stocks mentioned. The Motley Fool recommends Silvergate Capital Corporation. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Sallie R. Loera