According to Morgan Stanley, Crypto Bank Silvergate Was Badly Affected by the FTX Collapse!


According to Morgan Stanley, Crypto Bank Silvergate was badly affected by the FTX collapse! Already down more than 50% in the past month, shares of the bank were still 3% lower in premarket action Monday morning.

Concerns in the cryptocurrency market following the collapse of crypto exchange FTX pose several risks for Silvergate Capital (SI), Morgan Stanley said in a research report on Monday. Led by analyst Manan Gosalia, the Wall Street bank’s team lowered its rating on Silvergate shares to an equal-weight underweight, but kept its price target at $24. The stock was down 3% at $25.69 in premarket trading, adding to a decline of more than 50% since early November.

Silvergate is facing significant uncertainty about its near-term deposits, analysts said, noting that Silvergate’s digital deposits fell 60% in the fourth quarter compared to the third quarter. As customers withdraw their deposits, the bank faces pressure on its net interest margin and interest income because it must pay the proceeds from the sale of securities and wholesale loans. The loss of FTX could also lead to litigation and key risks in the crypto ecosystem, the note adds.

Morgan Stanley’s 2023 earnings per share estimate for Silvergate is $1.58, below the average estimate of $4.19.

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