SVB Financial Group shares sank as much as 47% on Friday as prominent venture capitalists recommended companies withdraw their money from the lender, sparking further worries over its financial health and liquidity in the wider banking sector.
(Bloomberg) — SVB Financial Group shares sank as much as 47% on Friday as prominent venture capitalists recommended companies withdraw their money from the lender, sparking further worries over its financial health and liquidity in the wider banking sector.
The stock losses have now reached 79% since the surprise announcement Wednesday from the Santa Clara, California-based company that it was issuing $2.25 billion of shares to bolster its capital position after a significant loss on its investment portfolio. The blow triggered a sharp selloff in US banks, which tumbled Thursday by the most in almost three years and extended losses in US premarket trading on Friday.
Adding to the bank’s woes, venture capitalists including Peter Thiel’s Founders Fund urged portfolio businesses to limit their exposure to SVB. Meanwhile, analysts cut their ratings on the stock, with Raymond James downgrading SVB to market perform and Truist Securities lowering it to hold, citing concerns over clients pulling funds and the pressure from higher interest rates.
“With the increasing risk of accelerated deposit outflows, we believe there is too much uncertainty to recommend the stock to investors,” Truist analyst Brandon King wrote in a note.
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