Ripple Labs is the financial technology company behind the popular cryptocurrency XRP (XRP -1.18%), sometimes called Ripple. The company uses XRP as a bridge currency to help facilitate cross-border payments and foreign exchange transactions.
Ripple got into legal trouble with the Securities and Exchange Commission (SEC), which alleged the company was selling its XRP cryptocurrency to investors as an unregistered security a few years ago. Ripple claims XRP is a commodity and not a security.
Those legal troubles are currently holding Ripple Labs back from completing its initial public offering (IPO). The company plans to go public eventually once it puts its legal issues in the rearview mirror.
IPO
Ripple's focus on using cryptocurrency to help improve the speed of cross-border payments has investors eagerly anticipating its IPO. Here's a guide to everything you need to know about the company ahead of its eventual IPO and how to invest in stocks like Ripple.
Is Ripple publicly traded?
Ripple Labs, the technology company behind the Ripple payment protocol, isn't publicly traded. However, the company's cryptocurrency, XRP, trades freely on cryptocurrency exchanges.
When will Ripple IPO?
As of late 2024, Ripple didn't have an IPO on the calendar. One factor delaying its IPO was a lawsuit brought by the SEC alleging Ripple sold $1.3 billion in XRP as an unregistered security. The lawsuit, which began in 2020, was still ongoing in late 2024.
That issue led the company to explore going public outside the U.S. However, those plans are currently on hold. Despite some outside pressure, CEO Brad Garlinghouse stated in late 2024 that an IPO wasn't a priority for the company thanks to its strong financial position.
How to buy Ripple stock
You can't buy shares of Ripple Labs in a brokerage account yet because it's not publicly traded. However, people interested in the financial technology (fintech) company have alternatives they can consider while awaiting its IPO. Here are three Ripple investment alternatives.
Fintech
1. Coinbase
Coinbase (COIN -1.37%) is a leading cryptocurrency exchange. It was launched to provide anyone anywhere with an easy, secure way to send and receive Bitcoin (BTC +0.77%). The company has since expanded to other cryptocurrencies, including Ripple's XRP. Coinbase's revenue and earnings will likely grow as more people use cryptocurrency.
2. Block
Block (NYSE:SQ) is a fintech company that provides businesses with several financial tools. The company began offering Bitcoin trading on its Cash App in 2017. It also formed Square Crypto, since renamed Spiral, to help advance the usage of Bitcoin.
The fintech company also produced a Bitcoin hardware digital wallet called BitKey. Block's investments in driving Bitcoin use could be a meaningful revenue and earnings catalyst for the company in the future.
3. PayPal
PayPal (PYPL +1.13%) is a leading digital payments platform. The company's Venmo peer-to-peer payments app enables users to trade popular cryptocurrencies, like Bitcoin and Ethereum (ETH +0.57%). PayPal has also developed a stablecoin, PayPal USD, to help users buy, sell, hold, and transfer cryptocurrency on its site.
The company earns fees as customers use crypto for payments or its stablecoin. The fees could be a significant revenue driver for PayPal if cryptocurrency becomes more than a speculative investment.
People who want to buy one of these Ripple alternatives can purchase shares in any brokerage account. Here's a step-by-step guide to investing in these fintech companies.
Step 1: Open a brokerage account
You'll have to open and fund a brokerage account before buying shares of any company. If you still need to open one, here are some of the best-rated brokers and trading platforms. Take your time to research the brokers to find the best one for you.
Step 2: Figure out your budget
Before making your first trade, you'll need to determine a budget for how much money you want to invest. You shouldn't invest money you'll need in the next three to five years, like your emergency fund or the money you're saving to buy a house. You'll then want to decide how to allocate that money.
The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years. You don't have to get there on the first day. For example, if you have $1,000 available to start investing, you might want to begin by allocating that money equally across at least 10 stocks and then grow from there.
Step 3: Do your research
It's essential to thoroughly research a company before buying its shares. You should learn about how it makes money, its competitors, its balance sheet, and other factors to ensure you have a solid grasp on whether the company can grow value for its shareholders over the long term.
Shareholder
Step 4: Place an order
Once you've opened and funded a brokerage account, set your investing budget, and researched the stock, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill out all the relevant information, including:
- How many shares you want to buy or the amount you want to invest to purchase fractional shares.
- The stock ticker (COIN for Coinbase, PYPL for PayPal, or SQ for Block).
- Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price at that moment.
Once you complete the order page, click to submit your trade and become a shareholder of one of these Ripple alternatives. Investors would follow a similar process to buy an IPO stock like Ripple when it goes public. Once shares become available, select Ripple's chosen stock ticker to buy shares through your brokerage account.
Is Ripple profitable?
The privately held Ripple doesn't need to disclose its financial results publicly, so there isn't any publicly available information on its revenue or profitability. The company's primary funding source has been selling XRP cryptocurrency, which has brought in cash.
At one point in 2024, the company held more than $1 billion in cash and more than $25 billion in crypto (mostly XRP). It was using some of the cash from XRP sales to buy back shares of Ripple Labs from early investors to provide them with liquidity. The company's financial position was strong enough that CEO Brad Garlinghouse highlighted it as a reason why going public wasn't a high priority.
In addition, the company makes money on transaction fees. XRP is primarily used as a bridge currency to facilitate foreign exchange transactions quickly.
People interested in investing in the eventual Ripple IPO should carefully evaluate its financial statements when they become publicly available. Potential investors will want to see the company's revenue growing rapidly with at least a line of sight to future profitability.
Should I invest in Ripple?
Ripple Labs isn't publicly traded, so investors can't buy shares yet, which gives them plenty of time to research the company while deciding whether they want to buy shares when it goes public. Here are some factors that could lead you to buy shares when Ripple goes public:
- You use XRP or other cryptocurrencies and want to invest in the company behind this technology.
- You believe XRP will play an important role in foreign currency transactions in the future.
- You don't think Ripple did anything wrong but believe the SEC is unjustifiably suing the company.
- You understand the risks, including that IPO stocks can be volatile and lose money.
- You think Ripple can deliver strong revenue and earnings growth in the future.
On the other hand, here are some factors that might lead you to be against buying Ripple's IPO:
- You don't understand what the company does or how it makes money.
- You don't use or own cryptocurrency.
- You're concerned about the company's legal battle with the SEC, which could foreshadow future issues.
- You don't like that Ripple uses XRP sales to fund its business and generate revenue for the company.
- You don't want to invest in volatile stocks, which will likely be the case for Ripple stock when it completes its IPO.
ETFs with exposure to Ripple
Since Ripple is still a private company, investors can't get passive exposure to it through an exchange-traded fund (ETF).
Exchange-Traded Fund (ETF)
However, they can gain exposure to the trends Ripple seeks to capitalize on through ETFs. One alternative to consider is a cryptocurrency ETF.
For example, the Amplify Transformational Data Sharing ETF (BLOK -2.10%) focuses on companies developing and utilizing blockchain technology. As of late 2024, it held shares of more than 50 companies, including PayPal (3.3% of the fund's assets and its ninth-largest holding), Block (3.5% and the seventh-largest), and Coinbase (4.6% and the third-largest holding). It had a rather high ETF expense ratio of 0.76%.
Another ETF alternative to consider is one focused on fintech stocks. For example, the Ark Fintech Innovation ETF (ARKF -0.25%) focuses on companies involved in the fintech theme.
Well-known investor Cathie Wood actively manages the fund, which typically holds 35 to 55 stocks. Coinbase (10.8% of the fund's assets) and Block (6.4%) were the fund's largest and third-largest holdings as of late 2024. The ETF also has a rather high expense ratio of 0.75%.
Related investing topics
The bottom line on Ripple
Ripple is working to blaze new trails through its XRP cryptocurrency to help facilitate cross-border and foreign exchange transactions that could enable the company to generate lots of fees in the future. However, the SEC's lawsuit over selling XRP is a major overhang delaying its IPO.
Once that uncertainty clears, the company could go public. That would spur more widespread use of XRP and drive up the value of Ripple and its cryptocurrency.
FAQ
About the Author
Matthew DiLallo has positions in Block and PayPal and has the following options: short December 2023 $67.50 puts on PayPal and short February 2024 $67.50 calls on PayPal. The Motley Fool has positions in and recommends Bitcoin, Block, Coinbase Global, Ethereum, PayPal, and XRP. The Motley Fool recommends the following options: short December 2023 $67.50 puts on PayPal. The Motley Fool has a disclosure policy.
