Just 18 days after its historic bank run, SVB Financial Group (OTCMKTS:SIVBQ) is finally trading again. The bank brought Wall Street to its knees as a run from its depositors caused shares to plummet. After Nasdaq imposed a trading halt, U.S. regulators seized control of the company. Other banks saw shares fall as well. Regulators quickly shut down crypto-centric Signature Bank (OTCMKTS:SBNY) due to “systemic risk.” Today, these delisted bank stocks are tradable again, this time over the counter (OTC). The Nasdaq and New York Stock Exchange have removed both from their listings.
How will this impact the company that helped usher in one of the darkest days in modern market history? Let’s take a closer look at this news and how investors should be assessing it.
2 Delisted Bank Stocks Are Back
As you can see, Silicon Valley Bank is now trading with a slightly different symbol that its previous SIVB. That’s probably a wise move when we consider the negative stigma that the company will forever carry with it. However, Signature Bank still uses the ticker that it traded under on the New York Stock Exchange. Both delisted bank stocks began trading today, and neither one is doing well so far. As of this writing, SIVBQ is down 45% for the day, while SBNY has fallen more than 68%.
As InvestorPlace contributor David Moadel notes, moving from the Nasdaq or NYSE to OTC will be viewed as a downgrade by many investors. But consider everything that has happened to Silicon Valley Bank. It is astounding that the company is allowed to trade at all.
It single-handedly generated the worst banking failure since the financial crisis of 2008. After the type of carnage it left on Wall Street, it is surprising that the new SIVBQ stock isn’t trading at lower levels than it is. Only falling 45% feels like a good day for a stock that no investor is brave enough to go near.
That said, trading over the counter seems the best-case scenario for these delisted bank stocks. Companies typically move to an OTC exchange when they are unable to satisfy the cash and regulatory requirements to list on a major exchange. When a company indicates that it may be in danger of delisting from the NYSE or Nasdaq, it tends to spook investors. However, for a company like Silicon Valley Bank, being allowed to trade anywhere seems like progress.
What Comes Next
As the dust settled from the initial trading halt, InvestorPlace Markets Analyst Tom Yeung noted that investors had “nothing to do but wait.” Well, now their shares are tradable again, though no one can sell either of the previously delisted bank stocks without taking a significant loss.
Given the low levels at which both OTC stocks are trading, it will likely be a long time before either one is even close to their pre-crash prices. It is possible that SIVBQ may never, as the company may not be able to restore investor confidence.
Silicon Valley Bank is tradable again, but that doesn’t mean the company will succeed again. As of now, this news really just means that investors have the opportunity to finally offload their SIVB shares, should they choose to.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
