Fintech Stock Plunges 15% In A Day Amid SVB Fallout — Analyst Says Time To Buy

Bill Holdings Inc. BILL, a cloud-based software company that automates back-office operations of small and mid-size businesses, disclosed over the weekend exposure to the Silicon Valley Bank owned by SVB Financial Group SIVB.

The Bill.com Analyst: CANACCORD Genuity analyst Joseph Vafi maintained a Buy rating and $175 price target for Bill.com stock.

The Bill.com Thesis: About $475 million of Bill.com’s cash could be potentially at risk out of the $2.7 billion of cash and short-term investments on its balance sheet at the end of 2022, analyst Vafi said. Out of the $475 million estimated exposure, $300 million could be the company’s own cash on deposit at the bank and the remainder of $175 million is CANACCORD’s estimate of residual risk in “for benefit of” customer accounts held at SVB, he added.

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The note was issued ahead of the government’s announcement concerning backstopping all SVB deposits.

Even in the worst-case scenario, Bill.com will likely lose over $500 million of its balance sheet cash and this is a sharp sting not a mortal bite by any means, the analyst said.

Bill.com has a large cash balance and is now nicely profitable, posting over $55 million in operating cash flow in the fourth quarter, he added.

“While we could see some short-term fluctuations in transaction volume, we note that Bill has already moved ACH processing it was doing at SVB to other banks,” Vafi said.

The analyst said he expects to see curtailment in buyback activity for the time being if there is cash lost over this situation.

“We continue to believe that BILL represents a great way to invest in what is still a large greenfield in enabling SMB's to migrate to the world of automated, electronic payments, “ the analyst said.

“If there is material weakness in the stock as a result of the SVB situation, we would view this as a buying opportunity.”

Price Action: Bill.com shares closed Friday’s session down 14.90%, at $68.35, according to Benzinga Pro data. In premarket trading on Monday, the stock rallied 6.82% to $73.01.

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