Seagate Stock Soars On Report Of Investment In Ripple Cryptocurrency
Shares of disk drive company Seagate Technology (STX) were flying Monday, reportedly due to its early investment in a cryptocurrency called Ripple that has soared in value, though it was sinking on Monday.
X A May 2015 report from blockchain news provider CoinDesk said Seagate invested in digital payment network company Ripple Labs in May 2015 in order to become an “active participant” in blockchain technology.
A wave of venture capital investment is pouring into blockchain technology startups. Ripple Labs was founded in 2012 and uses the Ripple protocol and its own native digital currency, called XRP as a way to move money internationally. Ripple says it has more than 100 customers using its technology.
The CoinDesk article, quoting a Seagate senior executive at the time, said Seagate was a participant in a $28 million Series A fundraising announced in May 2015. It said Seagate’s business model “would seem to lend itself to two popular use cases for blockchain technology: the ability to move payments and the ability to track the positioning of its supply chain.”
Fortune reported that financial services company Bloomberg, in December, had made XRP one of just four cryptocurrencies it provides pricing data for on its terminal service. The others are Bitcoin, Ether, and Litecoin, lending new legitimacy to the currency.
The Ripple currency was introduced in 2013 and initially traded for pennies. But its value soared in the summer as Bitcoin began to surge. According to CoinMarketCap, the trading value of Ripple was down 31% Monday, trading at 2.34. In comparison, Bitcoin was trading at 14.784, down 12%.
Seagate shares surged 7.2% to close at 46 on the stock market today. The stock was initially up 16%.
IBD’S TAKE: Seagate shares are currently extended from a breakout last week, from a deep cup-with-handle formation, that had a buy point of 43.17. Read IBD’s The Big Picture column each day to stay on top of the market direction, so you can know when you can be aggressive and when you should move to the sidelines.
According to Value Street Research, Seagate invested in the Series A and Series B of Ripple Labs, owner of 61% of XRP. Value Street says Ripple holdings of XRP are currently worth about $180 billion on the market. In addition to the $28 million Series A funding round, Seagate also invested in a $55 million Series B rounds of Ripple.
Value Street estimated, as of this morning, that Seagate’s investment in Ripple was valued at approximately $7.8 billion, or roughly two-thirds of the market capitalization of the company, assuming Seagate has not cashed out its investments in Ripple.
According to CoinMarketCap, there are currently 100 billion total XRP in existence, of which Ripple owns 61 billion. Value Street said.
The meteoric rise of cryptocurrencies such as Bitcoin and Ripple has done more than make some investors rich overnight. It’s also put blockchain — the software technology enabling Bitcoin and other cryptocurrencies — on a trajectory of its own.