Silvergate stock maintains growth despite a weak crypto market - The Average Joe


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    Silvergate stock maintains growth despite a weak crypto market


    July 19, 2022

    Silvergate Capital (NYSE:SI) — the bank for crypto — jumped 22% after reporting strong earnings.

    What’s the big deal? Despite bankruptcies and weak crypto prices, Silvergate stayed strong in 2022.

    • Unlike exchange Coinbase — whose earnings rapidly deteriorated during the crypto crash — Silvergate doesn’t directly rely on retail trading activity.
    • Silvergate provides banking services to large institutional clients — like Coinbase, Kraken and other crypto platforms.

    However, it provides loans to industry players and could be impacted if those players go under. So far, it’s managed to dodge a few bankruptcies.

    Looking at their second-quarter numbers:

    • $38.6M in net income — up from $20.9M in the same quarter of 2021.
    • $1.13 in earnings per share — compared to 84 cents estimated by Wall Street.

    Their Silvergate Exchange Network (SEN) — which lets clients move money between accounts and crypto platforms — processed $191B in USD transfers, up 34% from the previous quarter. Clients also grew from 1,503 in the previous quarter to 1,585.

    Bankruptcy risks and the broad downturn sent $SI stock down 46% in 2022 — now trading at a 12x forward P/E ratio which seems cheap if growth holds up.

    Keep building: Crypto may be in a bear market, but startups continue to build and funding holds strong.

    • In the first half of 2022, $9.3B was invested in crypto startups — down slightly from $12.5B in the first half of 2021.
    • Silvergate will continue to benefit from industry growth, not just prices.

    In June, a Dealmaker report named Silvergate as a potential acquisition target. In a bear market, you find who the strong ones are that’ll thrive when the market rebounds.

    Dive deeper: Silvergate took a big bet on crypto, and it paid off.

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