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While Silvergate Stock Crashed In Q2, Its Earnings Crushed: Here’s Why

No FOMO. No FUD. Silvergate CEO says crypto bank sticks to what they know and smartly manages risk in good times. That’s why they beat Q2 earnings estimates.

The stock is down about 1.15% after 5 days. But in the 30-day period ending Friday, the SI rose about 74% to a 6-month cap of 13%. Silvergate shares traded for $93.29.

Why a Crypto Stock Collapses While Its Earnings Fall

Silvergate stock fell relative to the rest of crypto stocks as its revenue surged last quarter. Investors have dropped stocks and taken their money somewhere else as inflation ramps up, recession disaster, and crypto winter begin.

But La Jolla, California bank, with a special slot for crypto companies having trouble finding banking services, filled its coffers like crazy last quarter.

The company made $16 million more in cash than analysts had predicted. The current month-long rally could be an indicator that the market is starting to price in on the US crypto bank’s second-quarter earnings.

Last week, Silvergate’s Q2 earnings report posted revenue of $79.8 million with earnings of $1.13 per share. For Q2 2021, that is a relatively small $0.8 per share at $42.5 million. That’s a big quarterly year over year increase per share.

The Wall Street analyst’s latest recommendation on Silvergate Capital stock is Strong Buy, with 9 analysts giving SI a Buy rating and 1 analyst rating the crypto stock “Hodl”. Meanwhile, short-term interest in crypto stocks hit a record high a week ago.

How did the company make so much money while crypto prices plummeted from last November’s highs?

What makes the difference between Three Arrows Capital, Celsius Network, Voyager Digital and Silvergate Capital in the crypto industry?

How Silvergate Earns As Another Crypto Winter Begins

The three former companies mentioned are now bankrupt. Silvergate CEO Alan Lane says his company has scored a hat trick by focusing on what it knows. Instead of giving in to the “Fear of Missing Out,” he says:

We really try to stay on track and not follow the latest fad, but really just focus on what we do well and basically just solve problems for our customers.

La Jolla Bank used to be a traditional financial company, and Lane was the “TradFi” banker. But after making a careful pivot to doing business with underserved crypto companies, the bank’s fortunes increased. Lane says:

We are still fully interested in lending to bitcoin. We believe those are some of the best loans we’ve ever made, and we want to continue to grow on that.”

Silvergate’s successful risk management record will likely prove a useful case study for other crypto projects and traditional financial services firms that are already getting their feet wet in crypto.

Cryptocurrency banking is not slowing down in combining the old with the new in the financial sector. It announced the addition on Tuesday morning, a new product development manager. Alaric Eby joined the Silvergate team after a stint as Vice President of New Product Development for American Express. Heading the Amex Digital Lab, Eby oversaw the launch of Amex Express Checkout.