- After its victory against the SEC, Ripple Labs is sparking IPO speculations, having been valued at $15 billion in 2022.
- An algorithm developed by Pitchbook indicates that Ripple has a 98% chance of successfully going public.
The Road to a Potential IPO
After a high-profile victory against the Securities and Exchange Commission (SEC), Ripple Labs—known for its digital payment network RippleNet and its native cryptocurrency XRP—has reignited discussions surrounding an IPO. Notably, CEO Brad Garlinghouse had previously indicated in 2022 that an IPO would be a likely next step after settling legal matters. Fast-forward to today, and the company has not only survived but thrived, even holding a private ‘road show’ in April 2023 to assess investor interest.
The Financial Landscape of Ripple Labs
Valued at $9.8 billion in 2019 following a Series C funding round, Ripple Labs repurchased those shares in 2022, inflating its valuation to an impressive $15 billion. Contrary to popular belief, it’s pivotal to differentiate between the publicly traded shares of Ripple Labs and its cryptocurrency token, XRP. While the former is an equity stake in the company, the latter is a digital asset designed for rapid and low-cost cross-border payments. Despite XRP‘s tumultuous 18 months due to the SEC lawsuit, many market analysts forecast bullish sentiments for the coin, particularly if an IPO takes shape.
Beyond Just a Cryptocurrency Provider
Ripple Labs is much more than just a cryptocurrency company; it has positioned itself as a full-fledged money transfer system. Built on blockchain technology, RippleNet provides a secure and transparent mechanism for global transactions. In addition to XRP, RippleNet can facilitate the exchange of fiat currencies, making it a versatile platform for various financial operations.
Ripple’s legal imbroglio with the SEC revolved around the nature of its XRP token—whether it should be classified as a security or as a currency. The court ruling in favor of Ripple not only augments the value proposition for both RippleNet and XRP but also sets an important legal precedent for the broader cryptocurrency sector.
Data-Driven Optimism for an IPO
A proprietary algorithm by Pitchbook, a venture capital analytics firm, has further fueled the IPO speculations. After scrutinizing various performance metrics, the algorithm allocated Ripple Labs a staggering 98% chance of a successful public offering. Although the model does not offer a time frame, it bases its evaluations on rigorous data analytics—everything from fundraising activities and patent holdings to revenue growth and market scalability.
Pitchbook has an algorithm that analyzed 64,000 past successful exits of private companies by IPO or merger & acquisition (M&A) since 2018. They analyzed data such as frequency and size of fundraising rounds, number of patents, number of employees, number of acquisitions made by… pic.twitter.com/DhYtlsC9G7
— Linda P. Jones (@LindaPJones) August 30, 2023
As Ripple Labs charts its path forward, it continues to expand its global footprint, specifically in the Middle East, where it has formed multiple partnerships. Even during the lawsuit, the company reported that the number of transactions on RippleNet had more than doubled in 2021, with a total payment volume reaching $10 billion.
Given the buoyancy of this blockchain juggernaut, both institutional and retail investors are keenly watching for the next move, which, if the data and circumstances are any indicators, could very well be a watershed IPO.