Morgan Stanley also lowered its 2023 EPS estimates for Silvergate Capital (NYSE: NO) on Friday, arguing that the digital asset-focused bank faces “many consequences and risks” from the death of crypto exchange FTX.
Silvergate ( SI ) disclosed last week that its year-to-date average deposits fell to $9.8B (excluding FTX deposits) as of November 15 from $11.9B on September 30.
Manan Gosalia, an economist at Morgan Stanley, estimates that Silvergate’s (SI) digital investment by the end of the quarter will fall to $5B from the previous level of $9B, adding that its sources of funding to support exits are “more expensive than SI digital deposits, and will weigh in on earnings.”
Instead, the sell-side analyst lowered his 2023 EPS estimate to $1.58 from $4.48, compared to the consensus estimate of $4.08.
In addition, SI stock’s average performance will depend on the amount of cash flow, Gosalia wrote in the note. Likewise, “any sign that savings rates have been rising and rising again would be good for the stock.”
But “evidence of additional stress on deposits, or further decline in the price of bitcoin (BTC-USD), would be negative.”
SI shares rose 3.5% to $29.12 Friday morning trading, down 50% in the past month and -85% year after year.
Earlier, (Nov. 16) Silvergate Capital was raised to Equal Weight in Wells Fargo as below.