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Seagate, Western Digital Rise on Demand for Drives During 'Chia Mania'

Investors are particularly enthusiastic for Western Digital and Seagate amid explosive demand for the Chia digital currency.
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Shares of data storage companies Seagate Technology  (STX) - Get Seagate Technology PLC Report and Western Digital  (WDC) - Get Western Digital Corporation Report rose sharply Monday amid optimism for cryptocurrency mining.

Investors were particularly enthusiastic about the Chia digital currency.

“Demand for large consumer hard drives has increased significantly due to Chia mania, with drives sold out on many websites and pricing on secondary markets meaningfully higher than usual,” Deutsche Bank analysts wrote in a commentary cited by Bloomberg.

Chia “could be an incremental boost for WDC and STX results in the short term,” though its long-term effect is uncertain, the analysts said.

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Wedbush analysts apparently agreed. They too noted rising prices for hard disk drive products, “a shift we would attribute to demand for storage for Chia."

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Western Digital traded Monday at $77.01, up 7.15%. It has soared 77% over the past six months thanks to strong demand for technology products during the pandemic.

Seagate traded Monday at $104.89, up 7.06%, and have surged 87% over the past six months.

Last month, Seagate posted better-than-expected earnings for its fiscal third quarter and offered upbeat guidance for the current quarter helped by cloud computing demand for high-capacity drives.

Seagate reported non-GAAP earnings of $1.48 a share on revenue of $2.73 billion for the latest period.

Also last month, Western Digital’s earnings beat expectations and drew positive reactions from analysts.

Morgan Stanley’s Joseph Moore rates Western Digital overweight and raised his price target to $88 from $84.

“Both of WD's markets have turned a corner, as NAND cyclically improves, and WD puts the margin challenges of the 18 TB transition behind them,” he said.