Ed Carpenter Racing's Bitcoin-sponsored number 21 Chevrolet which came in 5th in this year's Indy 500.

Silvergate Soars Again

After popping 12% in one day last month, Silvergate Capital Corporation (SI) shares spiked more than 21% on Monday. The explanation offered for the move by some popular finance sites strained credulity, e.g., "Silvergate Capital stock jumps after analyst points out correlation to Bitcoin". The analyst alluded to there was Sheena Shah of Morgan Stanley (MS), and her putative explanation was: 

Silvergate's equity price has tracked bitcoin well over the past year.  The correlation between the two appears to rise during crypto bull markets. 

The stock increased by more than a fifth in one day because an analyst noted that the cryptocurrency bank's stock correlates to some extent with the largest cryptocurrency? 

A More Likely Scenario

It seems more likely that the Morgan Stanley note simply put Silvergate on more investors' radar screens. Even after Monday's move, Silvergate had a market capitalization of just over $4 billion, less than 1/15th the market cap of Coinbase Global (COIN).

Readers may recall that when Silvergate spiked last month, we noted ZeroHedge's assessment that it was a likely acquisition candidate (Silvergate Soars): 

One company - which is already a bank and is certain to have a substantial advantage over its peers when the new regulation is implemented - will be Silvergate Capital, a bank which as Morgan Stanley dubbed earlier this week when it initiated coverage dubbed "a crypto bank like no other." Furthermore, the fact that Silvergate will be the issuer of Facebook's upcoming stablecoin, Diem - and one can be absolutely certain that once cleared, Facebook will seek to not only capitalize the ongoing shift to digital currencies but monopolize as much of it as it can - only assures that when the administration does move on with its treatment of stablecoins, SI will be one of the biggest winners. And, with a market cap of just $3 billion, we fully expect the company to be acquired by either its JV partner Facebook or some other major bank at multiples of its current market value.

A Potential Metaverse Winner

Virtual reality as an escape from real world dystopia has a long tradition in science fiction. Is Mark Zuckerberg bringing it to life?

In our previous post (Welcome To The Metaverse), we included Nathan Roth's tweet below, where he listed a number of cryptocurrencies and securities likely to profit from Facebook (FB) going Meta and asked "What did I miss?".

It occurs to us now that he missed Silvergate Capital. Maybe others did too, and now they're playing catch up.

Screen capture via Portfolio Armor on 5/6/2021. 

As of Monday's close, it was up nearly 61% since then, making it our 4th-best performer in that top names cohort after Laredo Petroleum, Inc. (LPI), Avis Budget Group Inc. (CAR), and Tesla, Inc. (TSLA).