Analysts are cautious about cryptocurrency bank Silvergate (NYSE:SI) ahead of its fourth-quarter 2022 earnings results on January 17. Recently, the stock witnessed a slew of downgrades and cautious takes, giving it a Hold consensus rating based on three Buys, five Holds, and two Sells. Let’s find out what could have gone wrong in the 4Q22.
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Q4 Expectations
For the upcoming Q4 quarter, analysts expect earnings of $0.68 per share, which is a 3% year-over-year increase. For revenues, however, the consensus estimate of about a 49% year-over-year increase is decently encouraging.
Investors and analysts continue to have concerns about Silvergate’s deposit-funding decline, which is likely to have dented the bottom line in Q4. The company revealed earlier this year that more than two-thirds of its deposits were withdrawn in the final quarter of 2022.
Moreover, the FTX crash in early November has led crypto banks like Silvergate to face regulatory scrutiny, which has likely created an overhang in Q4.
Additionally, the company handed out pink slips to about 200 workers in Q4. The costs associated with the firings, along with securities losses and impairment charges, are expected to have been a drag on Q4’s bottom line. For context, deposit outflows by bearish crypto-investors led Silvergate to push for cash-raising initiatives, including selling more securities to pay down its borrowings. These actions are expected to have resulted in significant impairment charges in Q4.
Will SI Stock Go Up?
Despite the cautious long-term outlook by Wall Street, SI’s stock price is expected to increase 23.8% over the next 12 months to $16.80.
