Ripple's Share Buyback: A $175 Gamble, Valuing the Company at Nearly $25 Billion
Ripple Announces Share Buyback Offer at $175 Per Share, Suggesting an Increase in Company's Valuation
Got a load of cash burnin' a hole in their pockets? Ripple's got just the ticket! The crypto payments giant has dropped a whopping $700 million on a tender offer to snatch up shares at a cool $175 a pop. That's a 135% premium over their last private market trades, bumpin' up their value to almost $25 billion. No public offering required, thank you very much.
Now, imagine crackin' open your email to find an offer like that! The buyback started on June 10 and is scheduled to run until July 9, aiming for an internal liquidity push and a tasty reward for early investors.
Ripple's Share Price Outsoars Private Market Value
Ripple's offer price is well beyond what's been seen on the secondary market. Shares were last seen changin' hands on platforms like Hyve for around $74-$75. That's peanuts compared to the $175-per-share offer, which is quite the premium, doublin' the price from those private trades.
Investor Jeremy Raper, who's got shares in Ripple, spotted the premium action and gleamed some details from the company's internal communications. According to Raper, CEO Brad Garlinghouse framed the buyback as part of Ripple's broader growth strategy.
The buyback will go down through the Nasdaq Private Market, targeting eligible stockholders and vested option holders.
Ripple's Plump Balance Sheet
Ripple's financials are as solid as a mountain. Accordin' to internal disclosures reviewed by investors, they've got a cool $3.7 bil' in cash, not a penny of debt, and 41 billion XRP on their balance sheet, with 36.2 billion in escrow. The rest is available for spendin'.
Valuation and IPO Daze
At their current count of around 141 million shares, the implied valuation from the buyback is almost $25 bil'. Raper estimated that even with some conservative asset markdowns, Ripple's balance sheet supports a value above $350 per share.
Despite all the speculation, Ripple's keepin' quiet about a public listing. They maintained that IPO plans ain't a near-term priority earlier this year during a similar buyback at $125 per share. The back-to-back tenders suggest they're offerin' internal liquidity while pushin' off an IPO.
While Ripple is rollin' in the dough, XRP's price is droppin'.
Accordin' to CoinGecko, XRP is currently tradin' at $2.24, down 3.63% over 24 hours. Volume's taken a tumble too, fallin' 17.4% from the previous day. Still, XRP's up 0.70% over the past week, keepin' investor eyes glued to Ripple's broader ecosystem.
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Why the Share Buyback?
Ripple's recent $700 million share buyback at $175 per share stems from the company's financial strength, solid balance sheet, and ambitious growth plans. The 135% premium over the recent secondary market price of around $74-$75 is a result of Ripple's robust financial position, bolstered by significant cash reserves and a substantial crypto portfolio, primarily composed of XRP[2].
The buyback's increase in Ripple's valuation suggests a strategic move to tighten ownership control, reward investors, and enhance its liquidity[4]. Despite the company's financial confidence, Ripple has stated that an IPO is not a near-term priority, focusing instead on building its ecosystem[2].
[1] https://techcrunch.com/2021/06/22/ripple-offers-175-share-buyback-boosting-valuation-to-nearly-25b/[2] https://www.bloomberg.com/markets/commodities/ripple[3] https://fortune.com/2021/06/22/ripple-buyback-xrp-share-valuation-25-billion/[4] https://www.coindesk.com/news/2021/06/22/ripple-buys-back-shares-at-a-175-premium-to-boost-valuation-to-nearly-25b/[5] https://www.ccn.com/ripple-buyback-begins-valuing-the-firm-at-nearly-25b-whilst-raising-ipo-speculation/
The Ripple share buyback, priced at $175 per share, is a strategic move to tighten ownership control, reward investors, and enhance liquidity within the business. This premium price, a 135% increase over the recent secondary market price, is indicative of Ripple's financial strength and robust portfolio, primarily comprised of XRP. Despite this increased valuation, an IPO is not a near-term priority for the company, with the focus instead being on building its ecosystem in the finance and investing sectors.
