Capital corp (nyse: si) was involved in a significant stock rating downgrade on monday. shares of silvergate plummeted 8.49% to $24.24 as morgan stanley downgraded the stock from equal weight to underweight. the downgrade was due to the company’s weak q3 performance and the fallout from ftx.
the downgrade occurred on monday, and the nasdaq reported that silvergate shares had plunged 52% from $50.96 on november 7 to slightly above $24 today. alan lane, the ceo of silvergate, issued a public letter to “set the record straight” amid morgan stanley’s ratings downgrade.
in the letter, lane accused short-sellers of spreading wrong information and assured that customer deposits are backed by the company’s strong balance sheet with ample liquidity. he also mentioned that, in addition to cash, silvergate can borrow at the federal home loan bank and federal reserve discount window, collateralizing its securities investment portfolio to process customer withdrawal requests. morgan stanley’s decision to downgrade silvergate’s share rating from equal weight to underweight was due to weak q3 performance coupled with the ftx fallout. reduced user deposits would significantly reduce silvergate’s net income and net interest margins, which is why morgan stanley maintains an earnings-per-share (eps) estimate for silvergate at $1.58, significantly higher than the reported $1.28 eps last quarter.