The ARK Fintech Innovation ETF Has Officially Sold Off 99% Of Silvergate Shares

Key Points:

• On Thursday, January 6, Cathie Wood’s ARK Fintech Innovation exchange-traded fund sold around 404,000 shares of Silvergate, reducing the ETF’s holdings by more than 99%.
• Its stock price fell below the issue price of US$12 yesterday, a drop of more than 45%.

ARK Fintech has liquidated nearly all of their shares in Silvergate Capital Corp. after the cryptocurrency-focused bank reported that it was obliged to sell assets at a severe loss due to customers withdrawing the majority of their deposits during the fourth quarter.

Cathie Wood’s ARK Fintech Innovation exchange-traded fund sold around 404,000 shares of Silvergate on Thursday, January 6, lowering the ETF’s holdings by more than 99%. The fund’s remaining holdings amount fewer than 4,000 shares worth around $43,000, or less than 0.01% of the fund’s total portfolio.

Silvergate’s preliminary fourth-quarter statistics revealed yesterday that the company’s total customer deposits decreased from $11.9 billion to $3.8 billion, forcing it to sell a quarter of its assets at a substantial loss. And cut 40% of the workforce (about 200 employees). Yesterday, its stock price fell below the issue price of $12, a decline of more than 45%.

Silvergate shares fell by a record 43% on Thursday, and they fell by as much as 6.9% further on Friday. The price has been falling for more than a year as the crypto business continues to tank. Since its all-time high of $222.13 in November 2021, the stock has dropped more than 94%, wiping off about $5.5 billion in market value.

Wood’s decision to nearly totally dump her holding is a sharp reversal from only two months ago, when her ARK Fintech Innovation fund purchased more than 200,000 shares of the bank in a week as the collapse of Sam Bankman-FTX Fried’s exchange heightened fears about crypto businesses’ solvency. She earlier sold over 190,000 shares of Silvergate in mid-December, when the stock was selling at nearly $19 per share, roughly 50% more than Thursday’s closing price.

“The conditions surrounding Silvergate are exceedingly complex, and the near-term outlook is difficult to anticipate,” Sutton said in a client note. “It must struggle with the continuation of crypto winter, regulatory inquiries, and possibly legislative action, all of which materially undermine the future growth profile.”

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