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Silvergate Loses a Bull as KBW Analyst Downgrades on Limited Visibility

On Tuesday, one of the few positive analysts who are still covering the company downgraded Silvergate Capital (SI) from an outperform rating to a market perform rating, citing insufficient clarity on the crypto bank’s prospects as the reason for the change.

According to a research note that was sent to clients, an analyst working for the investment firm Keefe, Bruyette & Woods (KBW) named Michael Perito decreased the price objective from $25 to $16.

According to what Perito wrote in the accompanying note, “with limited earnings and fundamental visibility over the past two months, we believe a market perform rating is more reflective of the risk/reward profile for SI at this time,” and “with a wide range of outcomes possible over the coming months,” the rating is “more reflective of the risk/reward profile for SI at this time.”

Despite this, the analyst has not fully lost faith in the company and does not intend to sell all of their shares. “We have defended the bank’s management, operational platform, function within FTX’s platform, and the health of their balance sheet while the bank’s shares have plummeted. We continue to get the sense that these viewpoints are genuine “Written by Perito Nevertheless, he pointed out that “utilizing basic valuation techniques” for the company over the following twelve months would be “a challenge” because of the instability in the cryptocurrency business that followed the bankruptcy of FTX.

Silvergate has lost around 90 percent of its value year-over-year, whereas bitcoin has lost 46 percent of its value. Silvergate was hurt by the crypto winter in general, and then by the FTX crash in particular, in November.

The last time that Perito altered his rating on Silvergate was in January 2022, when he upgraded the shares to outperform with a price objective of $225. At the time, the shares were trading for more than $100. According to the data provided by FactSet, the company presently has two buy ratings, five hold ratings, and one sell rating, with an average price target of around $15 per share.


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