Roku Says It Could Lose Almost a Half Billion Dollars Because of the Silicon Valley Bank Collapse

[Peter_Brosdahl]

The fallout from the collapse of Silicon Valley Bank is only just beginning as Roku says it could lose $487 million in deposits. Roku released a filing on March 10 detailing how the FDIC has taken over SVB and that "all insured depositors of SVB will have full access to their funds no later than the morning of March 13. However, the company also said in its filing that "The Company’s deposits with SVB are largely uninsured," and that, "At this time, the Company does not know to what extent the Company will be able to recover its cash on deposit at SVB."

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[David_Schroth]

This SVB failure is kind of a big deal... the payroll company that I use happened to use SVB, so now there's no more direct deposit functionality available until they get a new bank installed. I'll probably have to do paper checks for at least one payroll cycle if they don't fix it early next week. There's also likely some impact for businesses that had payroll in flight via SVB at the time of closure -> to pay on say, Friday, funds will get pulled Tuesday, sit for 1-2 days in the payroll provider's account and then go out on Friday.

If this doesn't get cleaned up fast, the ripple effect is going to be ugly...

 

[Brian_B]

Yeah this could be the first domino in another 2008 style Armageddon. I hope not but it isn’t going to be without a lot of follow-on consequences.

 

[David_Schroth]

Yeah this could be the first domino in another 2008 style Armageddon. I hope not but it isn’t going to be without a lot of follow-on consequences.

I don't expect it to be a domino sort of situation. SVB is fairly unique in that it primarily services businesses and a lot of them are in the startup/VC world. With interest rates going sky high and VCers tightening the purse strings, it appears their model did not account for a sustained cash withdrawal rate.

That caused them to have to sell assets (loans) at a loss (because the value of a loans as assets is inversely related to interest rate). That's what caused the shortfall - then they caused a run on the bank by trying to raise 2B in equity to cover the loss.

Overall, if the assets aren't panic sold, everyone should be able to be made whole, but the disruption to businesses will be significant (see: my payroll situation). I would imagine the loosening of Dodd-Frank will get reversed and then some...

 

[Brian_B]

I don't expect it to be a domino sort of situation. SVB is fairly unique in that it primarily services businesses and a lot of them are in the startup/VC world. With interest rates going sky high and VCers tightening the purse strings, it appears their model did not account for a sustained cash withdrawal rate.

I do hope your right. Just worried about the follow-on effect of payrolls bouncing, lots of startups folding, and maybe even some bigger players taking big hits - that kind of stuff can easily start to snowball, particularly since Wall Street doesn't follow any kind of logic - it's all just gut check.

But I do hope it's just isolated. It could take down the rest of crypto while it's at it and I wouldn't mind too much.