Shares of Silvergate Capital (NYSE: SI) tanked by more than 25% in pre-market trading on Thursday after the crypto bank stated that it was going to delay the filing of its annual report or Form 10-K. While SI is working to file its 10-K as soon as possible, it still does not expect to file the report before the extension date of March 16.
The company had stated earlier that it expected to swing to a loss of $948.7 million in FY22 versus a profit of $75.5 million in FY21. However, it now expects these losses to widen further as it sold additional debt securities in the first two months of this year “and expects to record further losses related to the other-than-temporary impairment on the securities portfolio.”
As a result, Silvergate anticipates its regulatory capital ratios to be adversely impacted and the Bank could not be “well-capitalized.” The company added that it is currently “evaluating the impact that these subsequent events have on its ability to continue as a going concern for the twelve months following the issuance of its financial statements.”
Top-rated Keefe Bruyette analyst Michael Perito raised these concerns around two days back terming the stock as “volatile” with the deleveraging in the crypto industry and with FTX going bankrupt adding to this uncertainty.
The analyst added that this has made it challenging to use fundamental valuation models for SI and the current value of the shares represents its book value accurately.
As a result, Perito downgraded the stock to a Hold from a Buy and slashed the price target to $16 from $25. Perito’s price target implies an upside potential of 18.3% at current levels.
Overall, Wall Street analysts remain sidelined about SI stock with a Hold consensus rating based on two Buys, six Holds, and two Sells.
