SVB Financial Group Stock Plunges 60%, CEO Advises Clients to “Stay Calm
By On Thursday, the stock of SVB Financial Group (NASDAQ: SIVB), the corporation that owns Silicon Valley Bank, dropped more than 60% and went below $100 in after-hours trading.[0] After SVB declared on Wednesday that they were raising $2.25 billion to support their financial stability after experiencing a drop in deposits as a result of turmoil in the tech industry, the stock market took a nosedive.[0] On Wednesday evening, SVB Financial revealed their plan to issue $1.75 billion in shares.[1] The parent company of Silicon Valley Bank reduced its guidance.[1] Startups are experiencing a lack of funding, resulting in a decrease in deposits.[1] SVB's loans to the tech industry have caused some major worries.[1]
Greg Becker, CEO of SVB Financial Group, held a conference call on Thursday, urging SVB-owned Silicon Valley Bank's clients to remain composed despite any worries they may have regarding the bank's financial status, as reported by a reliable source.
At the same time, Greg Becker – the CEO of SVB (SIVB) – addressed clients in a conference call, telling them to remain composed as worries about the bank's financial situation keep increasing.
At a meeting with venture capitalists, Silicon Valley Bank CEO Greg Becker urged them to keep their composure and informed them that the bank had enough liquidity to back our clients—except in the case that everyone is telling each other that SVB is in trouble, as reported by The Information.[2]
Moody's Investors Service cut the bank’s issuer ratings following the moves.[3] The downgrade “reflects the deterioration in the bank’s funding, liquidity and profitability, which prompted SVB to announce actions to restructure its balance sheet, Moody’s said. S&P lowered its rating on SVB to BBB- from BBB, leaving it just one notch above its junk rating. On Wednesday, Moody's reduced SVB to Baa1 from A3, reflecting the deterioration in the bank's funding, liquidity and profitability, which prompted SVB to announce actions to restructure its balance sheet.[4]
Following the receipt of Mr. Becker's letter, Moody's lowered the bank's bond rating and shifted the outlook from stable to negative.[5] Moody's believes that the conditions are unlikely to improve sufficiently for SVB to achieve a notable increase in its profitability, funding and liquidity.[6]
0. “Prominent banking analyst Dick Bove on Silicon Valley Bank's woes: ‘It is not a Lehman Brothers' – San Francisco …” The Business Journals, 10 Mar. 2023, https://www.bizjournals.com/sanfrancisco/news/2023/03/09/svb-financial-group-silicon-valley-bank-dick-bove.html
1. “Dow Jones Futures Fall: S&P 500 Breaks Support As SVB Financial Slams Banks; Jobs Report Due | Investor's …” Investor's Business Daily, 10 Mar. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-sp-500-breaks-support-as-svb-financial-slams-bank-stocks-jobs-report-due/
2. “Silicon Valley Bank Stock Plunge Sends Jitters Through The Startup World” Crunchbase News, 9 Mar. 2023, https://news.crunchbase.com/venture/silicon-valley-bank-stock-startup
3. “Markets close sharply lower as bank stocks take a beating” CNN, 9 Mar. 2023, https://www.cnn.com/2023/03/09/investing/stocks-daily-update/index.html
4. “Silicon Valley Bank's struggles spell further trouble for beleaguered tech startup market” CNBC, 9 Mar. 2023, https://www.cnbc.com/2023/03/09/silicon-valley-banks-struggles-signal-more-trouble-for-tech-startups.html
5. “Silicon Valley Bank’s Financial Stability Worries Investors” The New York Times, 10 Mar. 2023, https://www.nytimes.com/2023/03/09/business/silicon-valley-bank-investors-worry.html
6. “Silicon Valley Bank's liquidity crisis rocks the tech world” PitchBook News & Analysis, 9 Mar. 2023, https://pitchbook.com/news/articles/silicon-valley-bank-vc-startup-liquidity-problems
