top of page

Wedbush claims SVB impact to be long-lasting on Silicon Valley

According to Wedbush analysts, the effects of the recent SVB Financial Group situation will be long-lasting for Silicon Valley. Last week, SVB announced it had sold some securities at a loss and would sell $2.25 billion in new shares to shore up its balance sheet. This announcement triggered a panic, leading to California regulators closing down the tech lender, putting it under the control of the US Federal Deposit Insurance Corporation.

Wedbush analysts wrote in a note on Sunday evening that the "historical black eye moment" for SVB means there are short-term and long-term consequences for the tech sector from the second-biggest bank failure in US history. In the near-term, the impact on public tech companies is minimal, with the exception of Roku and a few others in the tech world with money at the bank.


However, the bigger and more troubling story is how this will change the start-up and VC community going forward. Wedbush has heard from numerous public tech companies, VCs, private tech start-ups, and investors, and believes that for tech start-ups with higher cash burns and a more uncertain environment, the hurdle for bank loans and other forms of debt financing will be a "different world going forward."


The analysts anticipate that scrutiny will be higher across the banking system, which will put more pressure on the financing needs of the tech start-up community for years to come. This could accelerate M&A within the start-up ecosystem and ultimately drive more late-stage start-ups to seek alternative financing, and in some cases, it could speed up the IPO path with a much tighter financing environment post SVB.


9Bullsfx, the region's best CFD broker. Stay updated on the latest market news, trading insights, and expert guidance by subscribing to our newsletter and following us on social media. Our team of experienced professionals is committed to providing you with the knowledge, resources, and support you need to succeed in the fast-paced world of trading. As a subscriber, you'll receive exclusive access to market analysis, trading strategies, and special offers. Don't miss out on this opportunity to take your trading to the next level. Sign up with 9Bullsfx today and start your journey towards financial success.

Comments


bottom of page