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This week, Brad Garlinghouse — chief executive of Ripple Labs in San Francisco — made a massive announcement at a Wall Street Journal event in Davos, Switzerland at the World Economic Forum.
The industry executive told a crowd at the event that he intends to bring Ripple public in the coming years, adding that he expects for there to be a number of crypto- and blockchain-related IPOs in the coming 12 months.
“In the next 12 months, you’ll see IPOs in the crypto/blockchain space. We’re not going to be the first and we’re not going to be the last, but I expect us to be on the leading side… it’s a natural evolution for our company.” –@bgarlinghouse at #WEF20
— Asheesh Birla (@ashgoblue) January 23, 2020
Due to the unexpectedness of this news, many have had things to say about the announcement. Some have been skeptical, others have been optimistic. One crypto analyst closely following all things XRP, Hodor, an industry commentator with over 50,000 followers, laid out why Ripple going public could be game-changing in an old blog post.
How Would Ripple Benefit From an ICO
Seemingly now-retired crypto commentator Hodor last year released an extensive blog post to Coil on how Ripple going public could affect the company at the cryptocurrency it has close ties to, XRP.
Firstly, he stated that Ripple, should it issue shares on public markets, would likely see a “sizable” IPO, estimating that it will take in around $5 billion cash worth of capital — less than Uber’s recent $8 billion IPO, Facebook’s $16 billion public round, and Visa’s $18 billion sale of shares in 2008.
https://twitter.com/Hodor/status/1170511283176779776
Even if Ripple brought in 20% of that, which would be $1 billion, it would have a large cash reserve it would be sitting on.
Hodor then noted that with this cash, Ripple could participate in strong marketing: “With $5 billion dollars, no amount of potential marketing is out of reach, and the days of Superbowl advertisements about digital assets may be upon us.”
He added that the sale of Ripple shares would also give the company more capacity to participate in more business deals and acquisitions, with Garlinghouse last year saying in an interview that acquisitions are a big focus of his company when their balance sheet is strong. This comment in the wake of Ripple partnering with top remittance provider MoneyGram.
As to how this could affect XRP, the analyst suggested that the reserve of cash would decrease Ripple’s incentive to participate in programmatic sales of XRP, which investors like Kyle Samani of Multicoin Capital may have depressed the price of the asset over the years. He added that a Ripple IPO would “accelerate the adoption of their payment processing software and its preferred digital asset,” potentially presenting a bull case for the battered crypto asset, which shed 50% of its value in 2019.
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