Silvergate Capital Corp suspends dividend on its preferred stock.
Wedbush Securities analyst reiterates his neutral rating on “SI”.
Silvergate stock is currently down over 85% since mid-August.
Silvergate Capital Corp ended 5.0% down on Friday after the crypto bank suspended dividend on its preferred stock.
Silvergate is trying to preserve capital
The embattled digital currency services company is cutting back on the payout to preserve capital. Its press release reads:
This decision reflects the Company’s focus on maintaining a highly liquid balance sheet with a strong capital position. Company continues to maintain a cash position in excess of its digital asset customer related deposits.
The California-based company also confirmed that its Board will re-evaluate the quarterly payment once market conditions improve.
Silvergate stock has lost over 85% since mid-August, related partially to the FTX collapse. Consequently, billionaire investor Cathie Wood almost entirely pulled out of it at the start of the new year.
Is Silvergate stock a buy?
According to a Wedbush Securities analyst, suspending Series A preferred stock dividend will make things more difficult for this financial infrastructure solutions firm in the long run.
Reiterating his “neutral” rating on the Silvergate stock on Friday, David Chiaverini said:
We believe this move could raise Silvergate’s cost of capital down the road when Silvergate attempts to tap the capital markets for a future capital raise. Any new fixed income or preferred issuance will require a higher coupon.
His $13 price objective on the stock suggests it lacks any upside whatsoever. Earlier in January, Silvergate Capital Corp said average deposits from digital asset customers tanked 39% to $7.3 billion in its fourth quarter as Coin Journal reported here.