As Ripple plans to celebrate after winning its SEC lawsuit, investors will be hoping there’s an IPO at the end of the tunnel. Learn everything we know about the company behind XRP and its potential listing.
What do we know about the Ripple IPO?
Ripple Labs – the company behind the XRP cryptocurrency – has not filed for an initial public offering (IPO). But the CEO of Ripple Brad Garlinghouse told CNBC back in 2022 that the company would explore the option of an IPO once its lawsuit with the Securities and Exchange Commission was over.
Fast forward to August 2023, and Ripple announced it would be hosting a grand celebration in New York to celebrate its win, which has reignited talk over the possibility of a Ripple IPO.
In April 2023, Ripple held a private ‘road show’, meeting potential investors to gauge their interest in its potential listing.
Many believe that Ripple’s IPO could have a significant impact on the value of the XRP cryptocurrency itself – rather ambitious price targets have now been set for the coin, given it’s experienced a slow 18 months of US growth amid the lawsuit.
However, it’s important to distinguish between the shares of the public company Ripple Labs, and the token XRP.
How much is Ripple worth?
Ripple was valued at $9.8 billion in 2019 after it raised $200 million in a Series C funding round. The company bought back the shares it sold in that financing round in 2022, boosting Ripple’s value to $15 billion.
How to trade the Ripple IPO
As there is no confirmed listing of Ripple, there’s no way to take a position on the IPO. However, once Ripple has gone public, you’ll be able to trade its shares in the same way as any other stock on the market.
In the meantime, you can trade thousands of other shares with City Index in these easy steps:
- Open a City Index account, or log in if you’re already a customer
- Search for the company you want to trade in our award-winning trading platforms
- Choose your position and size, and your stop and limit levels
- Place the trade
Alternatively, you can practise with a risk-free demo trading account, and get to grips with trading shares with virtual funds before you tackle live markets.
It’s important to take care when trading an IPO, as the share price can be volatile for the first few months.
What does Ripple do?
Ripple Labs is a technology company that serves as both a digital payment network and a cryptocurrency provider. It was founded in 2012 by Chris Larsen and Jed McCaleb.
RippleNet is the name of the company’s digital decentralised payment network, which facilitates online transactions. Unlike other financial payment platforms, RippleNet is underpinned by blockchain technology, which is used to improve the transparency and security of the network. RippleNet enables individuals and institutions to exchange money regardless of location.
Ripple’s other service is its XRP token – the cryptocurrency that is tailored to work on the RippleNet network, which speeds up the platform’s transactions. XRP can be used to buy other cryptocurrencies, as well as fiat currencies. The digital asset consistently ranks among the largest cryptocurrencies by total market capitalisation.
Although some consider the firm a crypto company, Ripple would say it is a money transfer system that just happens to offer a cryptocurrency.
This is what led to Ripple’s legal battle with the Securities and Exchange Commission. The company was accused of conducting an unregistered securities offering by selling its native crypto asset – XRP. Ripple argued that XRP is not a security, but a digital currency, and therefore didn’t fit into the SEC’s traditional framework. The court has now ruled in favour of Ripple – which not only has ramifications for XRP and Ripple but for the entire cryptocurrency market.
The XRP token’s price shot up on the news – rising by 76% in the hours following the ruling, but falling back soon after.
It’s important to note that it’s unlikely this will be the end of the SEC vs. Ripple, as they have the opportunity to appeal against the summary judgements.
Despite the lawsuit, Ripple continued to expand in other markets outside of the US and through partnerships with other businesses, particularly in the Middle East. In 2021, the number of transactions on RippleNet more than doubled – with total payment volume reaching $10 billion.
How does Ripple make money?
Ripple makes money through a variety of means:
- Selling its XRP token – Although after the initial sale, XRP is decentralised and Ripple Labs makes no money from forward transactions, any new distribution will come from Ripple
- Payment fees – Any transaction fee is paid to Ripple, as there is no incentive to validators on the blockchain (unlike some other networks)
- Profits from investment – Ripple has acquired other companies, such as Tranglo, and will profit from their revenue streams
- Interest fees on loans – In 2020, Ripple came out with a loan product to access on-demand liquidity, which is collateralised with XRP tokens
Is Ripple profitable?
As a private company, Ripple’s finances are still undisclosed. However, previous statements from a company spokesperson have implied that Ripple is cash flow positive and has a strong balance sheet.