Ripple magic wears off as Seagate shares slip on crypto mention
The Ripple effect might be fading.
Seagate Technology Plc shares erased a gain of more than 5 percent in premarket trading after providing few details on its stake in Ripple Labs Inc., the company behind the third-most-valuable cryptocurrency. The stock fell 2 percent as of 11 a.m. in New York.
Speculation earlier this month that the world’s largest hard-drive maker invested in the San Francisco-based fintech company sent its shares surging almost 20 percent in a week.
Ripple says it will use the blockchain technology underlying Bitcoin to rewire the global market for financial transactions. That business is separate from its XRP digital token, whose meteoric rise and fall in the past month captured attention. Seagate didn’t elaborate on its investment in the transfer business.
“A few years ago, we made an investment in a company driving technology innovation for distributed ledger and blockchain,” Seagate Chief Financial Officer David Morton said during its quarterly conference call with analysts. “While recent attention is on the valuation of the XRP crypto assets, we believe [Ripple] has a real and robust technology platform.”
Earlier in January, Loop Capital’s Ananda Baruah said the two aspects of Ripple’s business make it difficult to value any holding in the company.
“Unclear how to value the Ripple stake since its coin market cap is not the same as equity market cap and is not tied directly to fundamentals,” the analyst wrote in a Jan. 9 note.