Why Silvergate Capital Stock Jumped Today

What happened

Crypto bank shares Silvergate Capital (NYSE:IF) jumped on Wednesday, adding up to 9%. As of 1:58 p.m. ET, the stock was still up 6.9%.

The catalyst that pushed the crypto-friendly bank higher was an upgrade offered by a Wall Street analyst, as well as a high-profile rally in the cryptocurrency market.

So what

Michael Perito – an analyst at Keefe, Bruyette & Woods – upgraded Silvergate Capital to outperform (buy) market performance (hold), while simultaneously assigning a price target of $225, according to The Fly. Its new estimate would represent upside potential for investors of more than 74% over the coming year, compared to the stock’s closing price on Tuesday.

Image source: Getty Images.

The analyst highlighted the recent selloff, noting that it resulted in an attractive buying opportunity. He believes that before interest rates rise, investors should increase their exposure to digital-friendly banks positioned to benefit from these higher rates, “while maintaining fintech-like growth potential from a user perspective. and income”.

He might be on to something. As of yesterday’s market close, shares of Silvergate Capital had fallen 42% since November with no company-specific news.

The sale appears overstated, as consensus analyst estimates call for fourth-quarter revenue of $52.7 million, which would represent year-over-year growth of more than 94%. Earnings should also shine, with earnings per share growing 53%. If Silvergate succeeds in exceeding these expectations, it would mark the fifth consecutive quarter the company has done so.

Now what

Silvergate’s stock was on a tear last year, nearly doubling over the course of 2021, as interest in cryptocurrencies exploded, led by enthusiasm about their prospects of being universally used and accepted. .

However, there has been a broad sell-off in the digital asset market since mid-November, with many cryptocurrencies losing a third or more of their value. Silvergate Capital shares have become inexorably crypto-bound and – rightly or wrongly – follow the ebbs and flows of the broader cryptocurrency market.

That said, as investors retreated into cryptocurrencies today, Silvergate Capital received an additional boost.

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Daniel Vena 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