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Roku filed an 8-K saying that of its $1.9B of cash, $487M is stuck at SVB
- hartator 4y agoIf you use your bank account brokerage to buy stocks, what happen to the stocks if the bank goes bankrupt like this?
- dshanahan 4y agoVery likely completely safe, as equities are typically held in your name.
- antondd 4y agoYour stocks will be safe. The bank does not buy or sell stocks itself; this is handled by a stock broker that does trading on bank’s behalf.
- helloworld 4y ago"SIPC protects against the loss of cash and securities – such as stocks and bonds – held by a customer at a financially-troubled SIPC-member brokerage firm. The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash." https://www.sipc.org/for-investors/what-sipc-protects https://www.sipc.org/for-investors/what-sipc-protects
- dehrmann 4y ago> $500,000 That's way too low. The other thing this exposed is that FDIC protection for businesses is also too low.
- hotpotamus 4y agoIf you want the government to backstop every single risk for businesses and investors, then prepare to pay a lot more in taxes.
- dehrmann 4y agoMaking the leap from ensuring money saved in safe, heavily regulated entities to "backstopping every single risk" is disingenuous. There are risks businesses should have to think about. Safety of money in their bank isn't one of them.
- hotpotamus 4y agoWhy shouldn't they have to worry? FDIC insurance limits are hardly uncommon knowledge. I have more than $250K dollars and I certainly worry about how best to manage it.
- sneak 4y agoIt probably hasn't been recently (or ever) inflation-adjusted since it was set. There are a lot of limits and thresholds like this that could use regular (or even extant) reindexing. EDIT: it was increased to 250k in 2008 or 2010. As you note this is too low. It seems like it has been rather low its whole history. Given that our inflation rates are basically halving the currency every decade or so, it should be reindexed much more frequently (and also raised in any terms).
- Salgat 4y agoBusinesses are able to buy insurance on top of what FDIC provides. It's only too low if you're foolish enough not to buy additional insurance if needed.
- piyh 4y agoIt's a per bank amount. If you're floating 300k in cash as an average person, split it between institutions.
- kiltedpanda 4y agoInsured up to $1m CAD in Canada through the CIPF. One thing I came across to watch out for though is that if you hold fixed income securities (e.g. GICs) that are issued by the same bank as the brokerage account, then if it goes bust, the securities are NOT covered by insurance. "CIPF does not cover: the insolvency or default of the company or organization that issued your security" For example, if you hold a $500k GIC issued by TD Bank in a self directed TD brokerage account, and TD goes bust, then you're gonna have a bad day.
- Gustomaximus 4y agoCountry dependent answers here. In Australia most trade accounts use 'Chess' system which basically means when they buy shares they buy them in the account holders name so you own them and if the broker collapses it's not a problem. In US I believe they are generally owned in the brokers name but using 'SPIC' so you have $500k protection coverage similar to bank deposit protection.
- 0xbadc0de5 4y agoAaaand, it's gone. https://www.youtube.com/watch?v=Y3AM00DH0Zo https://www.youtube.com/watch?v=Y3AM00DH0Zo
- fullshark 4y agoDoes every public company need to file such a form by some time? Could we use these forms and public companies got get some sense of the contagion risk?
- yasp 4y agoOnly if it's material to the company.
- nodesocket 4y agoHow long do they have to file the 8-k? I own stock in a few high tech very silicon valley based companies that aren’t mega tech. A little concerned.
- dmoy 4y agoform 8-k itself seems to say 4 days or less: https://www.sec.gov/about/forms/form8-k.pdf https://www.sec.gov/about/forms/form8-k.pdf
- nodesocket 4y agoGreat, so we can expect to see a flurry of 8-ks come Monday. In the wise words of South Park. “Anddddddddd… It’s gone!”
- __derek__ 4y agoAlthough some are filing proactively to say that they're not exposed.[1] [1]: https://twitter.com/footnoted/status/1634302156303134720 https://twitter.com/footnoted/status/1634302156303134720
- hbcondo714 4y agoDirect 8-K link: https://www.sec.gov/Archives/edgar/data/1428439/000142843923000010/wk-20230310.htm https://www.sec.gov/Archives/edgar/data/1428439/000142843923...
- vsareto 4y agoGet ready for Pandemic 2: Banking Flu
- vuln 4y agoRoku stock is down 2.29$ after hours. I wonder if there is any money to be made shorting companies wrapped up in this mess.
- yareally 4y agoYes, but the time most of us find out it's likely chasing and low probability (buy the rumor, sell the news)
- fshbbdssbbgdd 4y agoOnly if you are faster to react to the news than the market. It would help to have a model of how much the company’s value is affected, so you can evaluate whether it’s priced in.
- RC_ITR 4y agoNot investing advice, but usually "The Money to Be Made" is found in non-obvious/non-knee-jerk reactions. Roku wasn't priced the way it was because of the cash on its balance sheet, it was/is priced on earnings, for example.
- altdataseller 4y agoWhich is barely 4% (its not even at the price it was a month ago) Which means its not a big deal according to investors
- deleted 4y ago[deleted]
- babyshake 4y agoIf anything, a swing trade on a dead creditor bounce seems like the easier play at this point.
- roncesvalles 4y agoThe real money to be made is in betting it will go back up if Fed finds a way to make SVB depositors whole.
- paxys 4y ago
- Asparagirl 4y agoOld: Subprime is contained! New: It’s just some startups!
- iammiles 4y agoTo save people a quick search, here is part of the Wikipedia definition of Form 8-K: "...a very broad form used to notify investors in United States public companies of specified events that may be important to shareholders or the United States Securities and Exchange Commission."
- carstenhag 4y agoAnd SVB means Silicon Valley Bank, which was shut down by a regulatory body some days ago: https://www.cnbc.com/2023/03/10/silicon-valley-investors-and-founders-express-shock-at-svb-collapse.html https://www.cnbc.com/2023/03/10/silicon-valley-investors-and... (seriously HN, we non-US people have never heard of your terms)
- Traubenfuchs 4y agoCould someone please explain what SVB is and what money being stuck there means? Why do companies put money there? For what reason would a company file, or have to file, an 8-K?
- IgorPartola 4y agoYou want to check out this: https://news.ycombinator.com/item?id=35096877 https://news.ycombinator.com/item?id=35096877
- zeven7 4y agoSilicon Valley Bank. Knowing that probably answers your other questions.
- carstenhag 4y agoSorry, that doesn't explain why companies use that specific bank or what/why they file a "8-K".
- boeingUH60 4y agoSilicon Valley Bank was a go-to bank for many big technology companies because it forged deep connections in the industry. The bank experienced a bank run and had to be taken over by the FDIC (U.S. government). Roku is letting investors know that they have a lot of cash stuck there and may not be able to access it for a while (as the FDIC tries to sort out the mess).
- notch898a 4y agoThe US Government is the people of the US. They went over the 250k limit. If they don't have private insurance for that, fuck them they're on their own. Not big enough to bail out, the regular people didn't get it either in the great recession.
- boeingUH60 4y ago
- reactspa 4y agoI was astonished that Roku has half a billion in cash. Then I learned this was only 26% of its cash reserves. I thought cash was considered wasteful because it loses value via inflation. Has the thinking changed? Can someone knowledgeable please help me understand this?
- numbsafari 4y agoYou need cash to pay for things, like payroll and rent.
- londons_explore 4y agoBut you typically run off firm promises of cash from investors. Then you only need a couple of weeks cash in the bank, and the investors promise to make cash available on demand as you need it.
- JumpCrisscross 4y ago> you typically run off firm promises of cash from investors This is a leveraged operating model. It’s risky and tanked many firms when the CP markets froze in ‘08.
- egl2021 4y agoIn my experience with small SV companies over the last several decades, this would be exceptional. Typically you get money from investors at negotiated, spaced points in time. In between your CFO manages the cash on hand to cover everything: payroll, taxes, and any other accounts payable.
- kevin_thibedeau 4y agoThey're ramping up for their own branded TV line. Might be a temporary injection for that.
- kypro 4y agoYou need some amount of cash for payroll, POs, etc. The rest is then generally held in "cash equivalents" such as short-dated government bonds. The latter has yield to offset inflation. But basically "cash" is being used quite loosely here. From the 8-K: > The Company has total cash and cash equivalents of approximately $1.9 billion as of March 10, 2023. Approximately $487 million is held at SVB, which represents approximately 26% of the Company’s cash and cash equivalents balance as of March 10, 2023.
- tedunangst 4y agoOut of $1.9 billion total.
- k8t 4y agoThis is not a perfect analysis, but: - Roku has 487M in SVB - After the 8-K released, Roku lost 323M in market cap Basically, the market is expecting around 30c of value recouped for every dollar inside of SVB. (note: I know this analysis isn't perfect, but it gives a rough idea)
- tedunangst 4y agoI'd be pretty happy to buy SVB deposits at 30c if I could do that without exposure to Roku everything else, etc.
- zamadatix 4y agoThe market expects the bank going under to impact Roku by that much expected value. That's very different than saying the market expects a certain percentage of money to be returned in the end and it's not clear why this is supposed to give even a ballpark estimate of the expected recoup. After all the share price has way more to it than what the current assets come to. It's also very likely the market changes its mind shortly, especially if Roku lays out the plan and expected impact to operations in more detail.
- frankchn 4y agoThe drop is in the aftermarket immediately after the 8-K release, so I think we can attribute most of it to the market's gut reaction to this piece of news and not the broader SVB impact (which would have occurred during market hours). Agree that the market might change its mind quickly, especially if estimated recoveries are projected to be high or the depositors completely made whole.
- hackernewds 4y agoAssuming the markets are rational ;) we take it as an axiom, but that is different than saying expectations are always priced in
- Kamq 4y ago
- erulabs 4y agoA bummer to find out Roku ever raised 2B in the first place when I've met several brilliant founders with good ideas who failed to raise ~200k. Despite being a staunch capitalist, I have to say, funds are so cowardly allocated in SV.
- muyuu 4y agowow they lost almost half a billion WOW they had how much money???
- macintux 4y agoThey didn’t lose it, they’ve temporarily lost access to it.
- SkyPuncher 4y agoUntil it's returned, it's unclear if they'll actually get it all back.
- aynyc 4y agoI think this might be the beginning. I think various funds (public or private) which have capitals stored in SVB is gonna be in a lot of trouble. Every investment firms are probably scanning their portfolios and business cash lines to see how much they are impacted by SVB and similar banks. I wouldn't be surprised to see a run on banks in the next few days/weeks if additional rumors (true or not) come out. Edit: didn't want to reply to everyone. 1. SVB probably thought they are in good shape, like every bank out there. 2. Even if the deposits are OK by early next week. Every banks/firms/funds will need to start reviewing their books and see what exposures they have. Even the slightest "issue" will trigger a bank run. Tolerance is really low at this point.
- slaymaker1907 4y agoAfter the GFC, banks and investment firms had to get really good at computing risk and impact from events like this so it probably won’t be too long.
- AdamJacobMuller 4y agoMonday will tell. FDIC will have done enough rough accounting to roughly get an idea of how much money large depositors will actually get. It's also entirely possible a deal gets worked out over the weekend that results in all cash depositors being whole at a new bank. Monday will tell.
- sp332 4y agoOh, did they? I hadn't seen that yet.
- gotoeleven 4y ago[flagged]
- sp332 4y agoOk it was late and I misread GP as saying they had already done it.
- 4y ago
- Eduard 4y agoThis shows the latest 8-K filings towards SEC: https://www.sec.gov/cgi-bin/browse-edgar?company=&CIK=&type=8-K&owner=include&count=40&action=getcurrent https://www.sec.gov/cgi-bin/browse-edgar?company=&CIK=&type=... As of this writing (2023-03-10), there are already 10 or so filings today mentioning SVB. Atom/RSS feed: https://www.sec.gov/cgi-bin/browse-edgar?action=getcurrent&CIK=&type=8-K&company=&dateb=&owner=include&start=0&count=40&output=atom https://www.sec.gov/cgi-bin/browse-edgar?action=getcurrent&C...
- costco 4y agoWhere are the people offering to buy SVB claims for 60-70 cents on the dollar? This happened with FTX and traditional bank runs like in [It's a Wonderful Life](https://www.youtube.com/watch?v=iPkJH6BT7dM&t=99s https://www.youtube.com/watch?v=iPkJH6BT7dM&t=99s). Maybe people are waiting to see how large the FDIC advances will be.
- majormajor 4y agoRoku having 75% of their money elsewhere instead of going 100% into a single bank seems to be a significant thing here. Given the much-discussed recently limits of depending on the FDIC, not putting all your eggs in one bank basket seems incredibly wise, guess now we just see how broadly exposed other businesses and other banks are.
- jiveturkey 4y agoall companies with this size of cash have an internal treasury function
- majormajor 4y agoObviously Roku is a lot larger than your typical startup, but it's a curious blind spot risk that all the VC's who panic-messaged founders to take out their cash yesterday didn't bother to try to mitigate it in advance across their portfolios of companies. The more money you have, the less competence you need - hardly a surprise, but... there are no shortage of articles that make it to HN with VCs talking up their own book about how great they are, so I think calling them out is fair. EDIT: and it's also worth everyone reflecting on where their own money is, and how many things would have to fail before they can get it. If you are fortunate enough to have any significant-to-you amount of assets your rely on vs just living paycheck-to-paycheck or on credit cards... think about spreading that shit out.
- SkyPuncher 4y agoThis is simply not a risk that most people would even consider worth thinking about. Yes, banks fail. However, the large, reputable ones fail few and far between. If you're a seed/Series A startup, you'd be much better off focusing on creating value. Your far more likely to fail to find PMF than you are to have your bank go belly up.
- itissid 4y agoIs there a reverse lookup SVB -> X Company Balance sheet line?
- olalonde 4y agoAs a side note, I find it fascinating how fractional reserve banking is not only legal but considered indispensable to the economy. It just sounds like a big scam. Why do private bankers get to create money and decide who gets it? It feels like there has to be a better way.
- stavros 4y agoBecause it's good for growth, as far as I know.
- baremetal 4y agoUntil it isn't.
- phkahler 4y agoThey don't create money, they loan out deposits. It's not as scammy as people think. You are free to put your cash in a mattress instead.
- hughw 4y agoThe create money by loaning out many times the amount of deposits they have.
- phkahler 4y agoNo. Less than their total deposires. But loaned money may well end up in a bank where it might be loaned out again. But it's not IMHO right to try to claim one deposite as somehow "the first one" that gets loaned out repeatedly. Each deposit is loaned out less than 100 percent. The bottom line is that not all deposited money is not readily available on short notice.
- hughw 4y agoIf you deposit $1000 in a bank, and if the reserve requirement is 10%, the bank can lend out $10,000 to a borrower. It gives the borrower a bank account with a $10,000 balance. It has created $9000 of money out of thin air.
- owenbrown 4y agoI've always found it odd that cash-rich companies keep bank accounts, when they could purchase short-duration t-bills. There's now at least one business bank the will purchase t-bills on a companies behalf with minimal transaction costs.
- chollida1 4y agoIf your Roku, How do you pay salaries interest on debt Bills Lobbyists Foreign companies that manufacture your hardware Hedge currency from foreign sales and bills All without a bank account? Keep in mind they say this is 25% of their cash, clearly they invested the bulk of their short terms assets elsewhere .
- di456 4y agoAka operating cash
- dehrmann 4y agoYou need some of that for working capital, and if you want to play the t-bill game, you're better off with a money market fund and letting someone else do the work for you.
- Invictus0 4y agoJust link directly to the sec form
- lordentropy 4y agoMoney is just a number on the ledger for the government. They can just give back everyone's deposits or maybe wait for a few months until it becomes a major crisis and then bail out everyone. The investors and shareholders of SVB are going to lose everything, but the depositors will be fine.
- athinggoingon 4y agoExcept that's what the Fed is trying to correct. Inflation is caused when the money supply in an economy grows at faster rate than the economy's ability to produce goods and services.
- lordentropy 4y agoNot sure why I got down-voted, but what I said just happened - https://home.treasury.gov/news/press-releases/jy1337 https://home.treasury.gov/news/press-releases/jy1337. The depositors will be made whole.
- funstuff007 4y agoForget about this loss, how much income was Roku giving up by holding $500MM (at least) in checking or savings accounts?
- skizm 4y agoIf I think FDIC will make everyone whole in a reasonable amount of time, do I just buy call options on all these companies that are tanking because of ties to SVB?
- randyrand 4y agoWow Roku is extremely rich. Who would have guessed!
- jacknews 4y agoIt was $487M ...