- Ripple, currently valued at $6.6 billion, could see its valuation surge dramatically if it goes public and accounts for XRP in its balance sheet.
- Talks about Ripple’s IPO have escalated following a significant legal win, potentially making way for an unprecedented valuation boost driven by XRP.
XRP: The Uncharted Goldmine in Ripple’s Valuation Equation
As rumbles of Ripple making an Initial Public Offering (IPO) grow louder, financial pundits are increasingly considering the role of XRP in Ripple’s IPO valuation equation. The crux of the matter centers around Ripple’s current accounting model, which treats its XRP assets as zero-valued items in its balance sheet.
XRP is not on Ripple’s balance sheet. As the price of XRP increases, and they do inevitable put it on their balance sheet, and Ripple IPO’s, the company’s assets under management will be enormous! https://t.co/b66hsF2kD5
— Mr. Man (@MrManXRP) August 31, 2023
In the nuanced realm of IPO valuation, the devil is in the details. Linda P. Jones, a recognized authority in investment analysis, recently shared her insights at a Linqto investor meetup. She highlighted that while share prices might capture public imagination, the intrinsic worth of a company is what truly counts. Drawing a parallel with Coinbase’s splashy public debut at an $86 billion valuation, Jones posited that Ripple’s modest $6.6 billion valuation leaves ample room for exponential growth, potentially over tenfold.
Unleashing XRP’s Dormant Financial Muscle
The most captivating facet in Ripple’s valuation playbook is its XRP asset, currently unaccounted for in its balance sheet. To break it down for those less versed in financial nomenclature, a balance sheet is essentially a snapshot of a company’s financial standing, providing an overview of its assets, liabilities, and shareholders’ equity. When an asset like XRP, which has its own market valuation, is not reflected in the balance sheet, it remains an untapped reservoir of potential value.
Imagine the seismic shift if Ripple begins to assign a market value to XRP on its books. Even at its current market rate—or potentially a loftier one given speculative market forces—the firm’s overall valuation could catapult to unprecedented levels. It’s akin to discovering an uncharted goldmine right in your backyard.
The IPO discourse has recently been fueled by Ripple‘s noteworthy legal victory, an event that the company plans to commemorate with celebratory functions in New York. This development has significantly increased the tempo in the rhythm of IPO speculation surrounding Ripple.
To offer a historical perspective, in 2019 Ripple boasted a valuation of $9.8 billion, a figure that rose to an impressive $15 billion in 2022 post a share repurchase from a $200 million Series C funding round. However, these numbers might just be the tip of the iceberg if Ripple revises its balance sheet to include XRP, thereby unlocking a latent treasure trove of financial muscle.