How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you'd invested in SVB Financial (
SIVB Quick Quote SIVB - Free Report) ten years ago? It may not have been easy to hold on to SIVB for all that time, but if you did, how much would your investment be worth today? SVB Financial's Business In-Depth
With that in mind, let's take a look at SVB Financial's main business drivers.
Headquartered in Santa Clara, CA, SVB Financial Group is a diversified financial services company. Incorporated in 1999, it operates through, among others, the Silicon Valley Bank, its primary subsidiary, providing a wide range of banking and financial products and services. SVB Financial has four operating segments:
Silicon Valley Bank: This segment (contributing 25.9% to total non-interest income in 2021) consists of Commercial Bank, which offers lending, deposit products, cash management services, global banking, and trade products and services, in addition to certain investment services. Other divisions include Private Equity Division, SVB Wine, SVB Analytics and Debt Fund Investments.
SVB Private (2%): This being the private banking division of Silicon Valley Bank, it offers a customized suite of private banking services, including mortgages, home equity lines of credit, restricted stock purchase loans, capital call lines of credit, and other secured and unsecured lending. It also fulfills private banking clients’ cash management needs through deposit account products and services. SVB Capital (17.8%): This being the venture capital investment division, it focuses on funds management, comprising funding of funds and direct venture funds (or co-investment funds). The segment manages venture capital funds, primarily on the behalf of third-party limited partner investors and the company. SVB Securities LLC (earlier known as SVB Leerink) (22.2%): Operating as a wholly-owned subsidiary of SVB Financial, it provides investment banking services across all subsectors of healthcare.
The company reports for these segments their non-controlling interest under the heading ‘Other items’ (32.1%), which reflects adjustments required for the reconciliation of results in conformity with U.S GAAP.
In 2019, SVB Financial acquired Leerink Holdings LLC ("SVB Leerink"). In 2020, it acquired the debt investment business of WestRiver Group. In 2021, the company acquired Boston Private Financial Holdings, Inc. and New York-based independent sell-side research firm, MoffettNathanson LLC. As of Mar 31, 2022, SVB Financial had total assets worth $220.4 billion, deposits of $198.1 billion, net loans of $68.2 billion and total stockholders’ equity of $16 billion. Bottom Line
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in SVB Financial a decade ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in June 2012 would be worth $8,293.74, or a gain of 729.37%, as of June 10, 2022, according to our calculations. This return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 203.08% and gold's return of 11.67% over the same time frame.
Analysts are forecasting more upside for SIVB too.
SVB Financial has an impressive earnings surprise history. The company's earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters. Growth in loans and deposit balances, efforts to improve non-interest income and global expansion strategy will likely keep supporting the company's financials. However, macroeconomic and geopolitical woes will likely continue weighing on its financials in the next few quarters. Elevated expenses are expected to hamper the bottom line to some extent in the near term. Shares of SVB Financial have underperformed the industry over the past year. Nonetheless, the acquisitions of Boston Private, MoffettNathanson and the debt investment business of WestRiver Group are expected to be earnings accretive and will likely help SVB Financial further cement its foothold in the innovation economy.
Shares have gained 8.06% over the past four weeks and there have been 12 higher earnings estimate revisions for fiscal 2022 compared to none lower. The consensus estimate has moved up as well.