When I wrote about SVB Financial (SIVB) in May I talked at some length about how it's a "different sort of bank" by virtue of its strong leverage to the innovation engine that is Silicon Valley and strong share in capital call loans and loans to early-stage technology and life sciences companies. I thought the shares were undervalued, but I didn't expect the frankly stunning inflows and growth SVB Financial managed in the second half of the year, even with the pandemic.
Up over 165% since that last article, valuation is a considerably more challenging now. You can easily argue that SVB Financial's strong (if not dominant) share in its core market throws regular valuation rules out the window. Likewise, so long as interest rates and returns on other asset classes remain unattractive, money will likely continue to flood into SVB Financial's target markets. At today's price, SVB needs a long run of not just double-digit growth, but growth in the neighborhood of 15%. That's not impossible, but it's a big ask and if private equity/VC investing slows, the impact on the share price won't be pretty.
Read the full article here:
SVB Financial Blows Out Expectations On Surging Client Funds
No comments:
Post a Comment