Roku has recently faced a backlash from investors revealing its exposure to the Silicon Valley Bank. This has caused a major setback for the company as its shares have moved downwards.
The entire past week has been nothing less than a shocker for the entire stock market because of the decline of the banking firms.
Even the start of the new week has been problematic for the major companies that are somehow linked or connected with the banks taken down by the US Feds.
Just recently, the US Feds went after two major banking firms known to be really close with the crypto firms.
The US Feds’ agenda was to save the locals of the country from the rising risks of investing in cryptocurrencies.
With more people being exposed to the crypto firms and more banking firms facilitating them, a great threat was being posed to the country.
Therefore, the Feds acted on their own with the aim of bringing down the entities supporting the crypto firms. This is the reason why the Feds went after the Signature Bank as well as the Silicon Valley Bank.
Mainstream Companies have been Impacted as Well
Unfortunately, the crypto companies were not the only entities connected with these banks. Since the seizure of these banks, many mainstream companies have come forward to reveal that they were exposed.
Being exposed means that they either had partnerships with these firms or had their accounts opened there. In both cases, it is the funds and reserves of the companies that usually get stuck once the company shuts down.
Roku’s $487 Million Exposure
Roku has recently announced that its funds are stuck at the Silicon Valley Bank. Surprisingly, a major fund belonging to the company is stuck at the (now shut down) bank.
The stakeholders did not take it lightly as they started to back out from their investments in the company. There was a huge backlash right after the company made the announcement.
The hardware manufacturing company has announced that it has $487 million worth of funds stuck at the Silicon Valley Bank.
The executives at Roku have revealed that these funds are stuck in the form of cash as well as equivalents for cash. The investors were devastated to learn that the funds were deposited in uninsured accounts.
Almost 30% of Funds are Stuck at SVB
According to Roku, the overall reserves they have are $1.9 billion, and the $487 million figures as 26% of the total reserves. This meant that almost 30% of the company’s overall reserves are stuck at the SVB.
The authority that has shut down the SVB is the US FDIC. The insurance regulator has announced that as of now, Roku’s funds have been added to the list of receiverships.
This means that there is hope that the company will receive its funds back from the SVB.
Due to the latest announcement, Roku’s shares have recorded a major plunge. The latest market data has shown that the share prices for Roku have plummeted more than 4% in the latest session.
No Clarity on Funds Recovery
The executives have announced that there is currently no saying how much they will be able to recover from the SVB. However, they are going to make the attempt and see if things work out well.
The matter is currently with the FDIC and the company has to wait until there is an update from their end.
Announcement by Roku
The Roku officials have communicated that despite taking an apparent hit of almost $500 million, the company expects to perform well in the market.
They have communicated that they are confident that their operations will run without any interruptions for the next 12 months.
Although the company has been making promises, there is no telling how the rising inflation plus the recession may hit it in the future.
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