Valens Equity Weekly Insights and Inflections for May 17, 2022

May 17, 2022

  • Silvergate Capital (SI) has built a robust banking network for the cryptocurrency industry, driving massive growth and network effects in the process. Uniform Accounting highlights that the market is missing Silvergate’s value proposition and profitability and growth potential, indicating equity upside.
  • Silvergate Capital was an early partner to the cryptocurrency industry, building its network as early as 2013. Over the last decade, the business has created massive network effects within the industry, driving sustainable growth and opportunities for ROE expansion. The market is currently pricing in decelerating growth and historically low Uniform ROE going forward, signaling the potential for equity upside as the business continues executing.
  • Silvergate’s management is closely aligned with shareholders for long-term value creation.
  • Management confidence in the Q1 earnings call about their lack of exposure to crypto prices, their new lending products, and their risk management suggest they are executing in the right areas to meet their strategic goals.

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