Silvergate Capital Share Price Forecast April 2022 – Time to Buy SI?
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Shares of Silvergate Capital (NYSE:SI) are in the red today, after closing at $135.23 as of April 6th (19:55 EDT). As higher interest rates lower the present value of risk assets, cryptocurrency prices are in retreat, which has caused Silvergate shares to decline as well.
Silvergate Capital – Technical Analysis
The financial statement released by Silvergate Capital indicates a market cap of $4.528 billion with total assets worth $16.009 billion. Revenue for 2021 was at $175.65 million with a profit margin of 44.71% compared to $97.84 million in 2020.
Moving averages such as Exponential Moving Average (10)(145.33) , Simple Moving Average (10)(149.78), Exponential Moving Average (20)(141.08), Simple Moving Average (20)(141.10) and Exponential Moving Average (30)(137.27) are indicating a sell action. Oscillators such as Relative Strength Index (14)(48.12), Stochastic %K (14, 3, 3)(43.78), Commodity Channel Index (20)(−29.90), Average Directional Index (14)(21.90) and Awesome Oscillator(16.59) are neutral.
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Recent Developments
Silvergate Capital has existed as a small bank in California for around 30 years. Noticing the rise of cryptocurrencies back in 2013, the bank entered the space as a provider of banking services. Silvergate Capital has created the Silvergate Exchange Network which has been immensely profitable for the bank. Since the bank doesn’t pay any interest to holders of its trading accounts, high-interest rates are profitable for the bank.
Recently, the federal reserve has decided to raise interest rates, and recent comments from Fed officials indicate that a tighter monetary policy is one the way. The company doesn’t rely on crypto prices staying high. In the company’s fourth quarter of 2021, SEN reported healthy gains of $219 billion despite cryptocurrency prices crashing in the final months of the year. This resulted in a net income of $21.4 million in 2021 compared to just $9.1 million in the fourth quarter of 2020.
Silvergate Capital recently acquired the crypto project Diem from the Diem Association. It has acquired all of its assets for $50 million in cash and issued just over 1.22 million shares to the group, for a total price tag of $182 million. Diem’s assets include a blockchain, plans for an upcoming cryptocurrency as well as operations infrastructure and software for managing the assets.
Should You Buy SI Shares?
Silvergate Capital has been in the news lately for a variety of reasons. The bank has expanded SEN to include money transfers in EUR. It has also issued a $205 million Bitcoin collateralized loan to a MicroStrategy subsidiary. Silvergate Capital shares are trading about 7 times trailing-12-month earnings per share, which is a steep price for a bank. The bank’s valuation is based on future expectations which assume that the company continues to execute on its crypto strategy,
Silvergate Capital shares serve as a perfect vehicle for investors looking for exposure to the crypto industry. It is a much more stable growth than cryptocurrencies or crypto ETFs. Given that the bank is a cash-generating business, there’s a way to value an investment. Additionally, cryptocurrencies don’t generate revenue or profit. Thus, if someone values the merits of buying them, they’re relying on more intangible factors.
All of these factors suggest that Silvergate Capital shares are volatile. However, for investors who think the digital economy has a long runway of growth, they can add the shares to their watchlist.
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