What the Silicon Valley Bank Collapse Means for Media and Entertainment Stocks

The collapse of Silicon Valley Bank SIVB has created doubt about access to capital for tech firms, but we do not expect any material impact on online media or advertising firms under our coverage and we are not adjusting our fair value estimates on these stocks. The chance of Silicon Valley Bank becoming a contagion did decline a bit as of March 12. While a second bank, Signature Bank SBNY, was closed, regulators announced that all deposits at both banks will be accessible beginning on March 13.

Based on previous filings and communication with some of the firms, DoorDash DASH, Snap SNAP, PubMatic PUBM, and Uber UBER have some exposure to Silicon Valley Bank but none is material. While we could not find Silicon Valley Bank mentioned in Pinterest PINS filings, the firm’s “no comment” response to us raises some flags. We hope Pinterest will clarify that response as, based on some reports, it may have some exposure, although not clear if it is material.

We think Google’s cloud revenue could be affected, although by less than 10%, as the health of some startups and other tech clients remains in question. With the assumption of a gradual recovery in venture capital financing in 2024 and beyond, the impact of this headwind would result in only a 3% cut to our Alphabet GOOGL fair value estimate.

If Silicon Valley Bank becomes a contagion, the effect on startups and smaller businesses could increase, which may further hurt the cloud space and possibly Google. We could also see a decline in ad spending by smaller businesses which could pressure the revenue growth of more firms under our coverage. However, again, actions taken by regulators have lowered the chances of such a scenario occurring.