Here’s Why SVB Financial Group Is Soaring on Friday

What happened

The stock market was having a strong day on Friday, with all three major indexes in the green a couple of hours into the trading session. However, SVB Financial Group (NASDAQ:SIVB) was a major standout, with shares up by 12% at 11:15 a.m. EDT.

So what

As you might expect given that we’re in the middle of earnings season, SVB’s move today is driven by its latest results. The bank’s earnings didn’t just exceed expectations — at $10.03 per share, they were the best in the bank’s history.

A man looks at his laptop and pumps his fist in celebration.

Image source: Getty Images.

What’s more, the tech-focused bank reported a record level of profitability as well, with a jaw-dropping 27% return on equity. Assets grew by 90% year over year, and total client funds of $288 billion reflected a 71% increase. Even net interest income came in higher than expected, despite the persistent low-rate environment.

The results aren’t too shocking, since private equity investment has been extremely strong, as have the IPO markets. But these results were better than analysts thought we would see, and by a wide margin. And the bank’s CEO says the company sees “significant tailwinds for growth in the innovation economy,” which could help drive even more growth going forward.

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Now what

SVB Financial’s business seems to be firing on all cylinders, and that’s why we’re seeing the stock jump higher. Analysts seem to agree — several major firms increased their price targets following the announcement, and if the company keeps up its recent growth trajectory, there could be quite a bit of upside potential from here.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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