Bank Stocks Alert: SVB Financial (SIVBQ) Stock Resumes Trading in Volatile Fashion

• Silicon Valley Bank’s holding company saw some gains Thursday.

• However, SVB Financial Group didn’t stay in the green for long.

• Speculative trading clearly isn’t enough to make a shaky stock a buy.

This week, two delisted bank stocks began trading again via the over-the-counter (OTC) exchange. SVB Financial Group (OTCMKTS:SIVBQ) now trades under a different symbol. Meanwhile, Signature Bank (OTCMKTS:SBNY) maintains the same ticker it had on the Nasdaq Exchange.

Given the fact that SVB’s principal subsidiary, Silicon Valley Bank, is blamed for the industry’s worst crisis since 2008 and that SBNY closed its doors after regulators deemed it a “systemic risk,” some investors were likely surprised by this development. But what may be more surprising is the fact both bank stocks were up earlier today.

Although they have since slipped back into the red, these performances warrant a closer look.

What’s Happening With the Delisted Bank Stocks?

Many people probably didn’t expect to see SIVBQ stock pull into the green shortly after its OTC debut. But that’s exactly what it did. SBNY hasn’t done as well, however, down 21% on Thursday.

Of these two bank stocks, SIVBQ has made considerably more progress since it began trading over the counter. Still, both names were quick to reverse course today and are poised to end the day firmly in the red.

There haven’t been any positive catalysts to drive these bank stocks up since they became tradable again. As such, it’s clear that today’s gains have been driven mainly by speculative trading. This shouldn’t come as a surprise. As much trouble as the collapse of Silicon Valley Bank caused for the financial sector — and for investors in general — there will always be less risk-averse traders who embrace the companies others won’t go near.

That said, this doesn’t mean either stock is likely to rise again anytime soon. Regulators shut down both companies for posing significant risk to the financial system. While speculative traders are willing to stake bets on SIVBQ stock right now, many will never trust it again.