Exploring the Route to Purchase Shares of Rippling Corporation
Investors are frequently interested in knowing how to invest in Rippling's stock. This company excels in cloud-based enterprise software and is revolutionizing the market for small and medium-sized businesses. Founded in 2016, Rippling has already achieved a staggering valuation of $13.5 billion.
Unlike other startups that focus solely on one aspect, Rippling tackles an intriguing mix of problems. The company's software tackles three main tasks: payroll, human resources (HR), and information technology (IT). Firms can utilize Rippling's HR solutions to onboard and train employees, manage employee benefits, and grant access to apps through its IT solutions. Lastly, Rippling's customers can record hours and pay their employees accordingly.
Co-founder and CEO Parker Conrad acknowledges the traditional wisdom for startups to concentrate on doing one thing well. However, he aims to build what he calls a "compound software" business. He believes that by offering various software solutions, Rippling can provide customers with superior data, better pricing, and improved results.
The unconventional approach could explain why Rippling is gaining popularity at such an incredible pace. According to management, since it's a one-stop-solution, businesses using its software need only half the employees in their HR, IT, and finance departments. Additionally, Rippling can price its software competitively since it provides a software package.
Furthermore, Rippling's software is cloud-based and can be managed through its mobile app. It features numerous automation functions to save managers' time and boasts a user-friendly interface. New employees can even be onboarded in 90 seconds using Rippling.
Lastly, Rippling integrates with major enterprise apps, such as Slack from Salesforce, Zoom Communications, and Asana. This means that companies can utilize Rippling while keeping other enterprise products they have in place.
Is Rippling publicly traded?
Is Rippling stock available for trading?
Rippling remains a privately-held company, having not yet gone public as of December 2024. Companies that have yet to offer shares to retail investors through an IPO (Initial Public Offering) are considered privately held.
IPO
An IPO is the first sale of stock by a private company to the public, transforming it into a publicly-traded entity. Rippling may decide to go public for several reasons, including raising capital, boosting brand awareness, allowing private investors to cash out, and gaining more liquidity options in the future.
When will Rippling IPO?
Will Rippling go public soon?
Rippling has not officially announced an IPO, so it's not yet featured on the IPO calendar. Rumors suggest a possible IPO in 2025, but an exact date remains uncertain.
Generally, companies wait to go public until they have achieved sufficient size due to the high expenses associated with being a public company. However, Rippling may already be big enough for this step due to factors that will become clear later.
Startup companies, such as Rippling, typically delay going public until the business can demonstrate consistent growth, outperforming major competitors, and a viable path towards profitability. Companies without these qualities may not enjoy a successful IPO.
Market conditions also play a significant role in when a company decides to go public. When the IPO market is hot, like in 2020, companies may choose to go public. However, when the public markets are less interested in IPO stocks, as has been the case from 2022 to 2024, companies may postpone their IPO until sentiment improves.
Steps to investing
How can I invest in Rippling stock?
Directly investing in Rippling stock may not be possible at this time. However, investing in stocks generally is straightforward.
The process begins by opening a good brokerage account. Many platforms offer zero fees, online services, and do not require minimum deposits. Brokerages like E*TRADE and Fidelity are popular choices for many investors. But beyond the big things, the choice of a brokerage may come down to which platform has the most user-friendly interface.
Investors are technically ready to purchase stocks after opening their brokerage accounts. However, setting an investment budget is crucial. Investing within one's means is essential, meaning investing on margin should certainly be avoided.
Once investors have a fully-funded brokerage account, they can buy shares of any public company they'd like. However, it's always best to conduct research first. Understanding a company's customer retention metrics, revenue growth, profit margins, and insider ownership can help investors decide if it will be a good investment.
Ultimately, when an investor locates a commendable stock, the final act is purchasing it. Digital trading platforms provide various purchasing options. Commonly, users provide details such as whether they wish to acquire or sell, the designated symbol for the stock (referred to as the "ticker"), and the number of shares to buy. Noteworthy, certain brokers grant the opportunity to purchase fractional shares by allowing users to specify the amount of money they wish to invest rather than the precise number of shares.
Purchasing methods
Buying Rippling stock
Some fortunate investors may partake in the exclusive privilege of investing in Rippling stock. Interestingly, platforms such as Forge Global (FRGE 0.68%) cater to accredited investors, providing a space to trade shares of private companies. Nonetheless, it's conceivable to invest in Rippling by utilizing other platforms with similar offerings.
Another intriguing investment approach involves financing stock options via Equitybee and comparable platforms. In this scenario, an employee at Rippling eyes liquidity for their stock compensation prior to an Initial Public Offering (IPO) event. Accredited investors may provide liquidity, exchanging their resources for future shares.
Financial performance
Is Rippling profitable?
Regrettably, it's not feasible to ascertain whether Rippling is financially sound. As a private company, some essential information remains concealed from public scrutiny. Nevertheless, here's some insights into this flourishing business.
- Unquestionably, Rippling exhibits impressive growth rates. According to Rippling's official blog post from March 2023, the company was experiencing "triple-digit growth rates." Alternative sources suggest its revenue surged by over 200% in 2022 before escalating another 100% in 2023.
- Significantly, Rippling operates on a subscription-based basis. Furthermore, the company boasts an outstanding $350 million in annual recurring revenue following its latest funding round.
- Moreover, Rippling remains well-financed. As of its Series F funding round, it has raised a remarkable $1.4 billion.
Businesses relying on Software-as-a-Service (SaaS) usually boast substantial gross profit margins. Thus, it's likely that Rippling is amassing a lucrative gross profit, while growing its high-margin revenue stream rapidly. Despite these prosperous financial indicators, it's likely that Rippling is still reporting losses on a net basis.
Investors typically expect high-growth companies to invest heavily in their development, which results in expenses exceeding profits. In this stage, companies are less inclined to prioritize profits to fuel their rapid expansion.
Admittedly, Rippling's strategic focus includes building software for several distinct applications (with plans to expand into various domains in the near future). As a result, the company allocated approximately half of its revenue for research and development in 2024, excluding stock-based compensation – a substantial investment that could potentially reap long-term benefits.
Investment opinion
Should I invest in Rippling?
The imminent public offering of a company generally provides valuable information that can guide investors in their investment decisions. Unfortunately, with such information still unavailable in the case of Rippling, it's challenging to make a definitive assessment about its potential as an investment opportunity.
Moreover, investing is a highly personal affair, and a high-growth start-up may not suit every investor's preference.
However, investors can consider Rippling under a risk-reward perspective. High-growth companies often showcase impressive stock performance records. If Rippling can continue its trajectory of triple-digit growth and secure sufficient capital to fuel its expansion, it could deliver notable returns.
Rippling's ability to maintain operations during financially challenging circumstances in early 2023 has served as a testament to its operational prowess. Faced with challenges such as processing numerous payments when its bank failed and raising capital to ensure that payments were processed on schedule, Rippling demonstrated an impressive capacity for resilience.
On the downside, several potential pitfalls deserve consideration. Firstly, Rippling appears to have a lofty valuation – its Series F funding round valued the company at $13.5 billion. Coupled with its high gross revenue, this translates into a price-to-sales ratio (P/S) of nearly 40, an elevated figure that may cap some future upside.
Secondly, Rippling faces stiff competition. Despite its unique three-in-one software solution, further challenges may emerge as competitors adjust their strategies to counter its approach. Nevertheless, Rippling's CEO has staked a claim that the company's "compound software" approach is the future of software development.
In light of this situation, the well-informed investor will carefully consider their risk tolerance and potential return expectations before deciding whether to invest in Rippling.
If this company indeed brings a revolutionary approach to cloud-based software, others might adopt it as well. Major corporations offering services in Rippling's domains and could potentially venture into additional fields with minimal strain.
For instance, Automatic Data Processing (ADP, 0.7%) is already reputable for reliable payroll services and also offers HR options. It wouldn't be implausible for the company to delve into IT solutions later on. The same applies to companies like Paylocity (PCTY, 2.13%) and numerous others.
Nonetheless, I perceive Rippling to be on the riskier end when it comes to investment. Yet, this doesn't guarantee it will turn out to be a disastrous investment. Investors just need to ensure it aligns with their investment strategy and allocate sufficient funds considering the potential downside risks.
ETF Options
ETFs with Rippling Exposure
Investors seeking to invest in a theme without picking the individual winners may prefer Exchange-Traded Funds (ETFs). Since Rippling isn't publicly traded, it does not have ETF holdings. However, there are related investing themes with ETF options.
Exchange-Traded Fund (ETF)
An Exchange-Traded Fund (ETF) enables investors to purchase multiple stocks or bonds simultaneously. For cloud-based software enthusiasts, they could consider investing in The Global X Cloud Computing ETF (CLOU, 1.92%). This ETF contains companies from the enterprise software sector, many of which boast a Software as a Service (SaaS) business model, like Rippling.
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For investors who enjoy younger companies instead of classic stalwarts, IPO stocks could be an alternative. Consider The Renaissance IPO ETF (IPO, 2.32%). This ETF has investments in numerous upcoming companies that have gone public recently. When Rippling finally goes public, there's a possibility that The Renaissance IPO ETF will add it to their portfolio.
The Final Verdict on Rippling
Rippling is an intriguing startup with rapid growth, solid execution, and ample funding to support future ventures. Retail investors, however, currently don't have suitable investment options for Rippling. Keep an eye on it as it seems to be preparing for an IPO in the near future.
FAQ
Investing in Rippling FAQ
Is Rippling publicly traded?
No, as of December 2024, Rippling was not publicly traded.
Who are the investors in Rippling?
Rippling completed Series F funding and Coatue served as the leading investor. Previous investors include Greenoaks Capital Partners, Sequoia Capital, and Founders Fund.
What is the valuation of the Rippling IPO?
The Rippling IPO valuation is yet to be determined as they have not filed registration documents to become a public company. However, its private market valuation was $13.5 billion during an April 2024 funding round.
How does Rippling generate revenue?
Rippling earns revenue through by selling subscription software to businesses.
While Rippling remains a privately-held company and its stock is not currently available for trading, interested investors could consider ETFs such as The Global X Cloud Computing ETF (CLOU) or The Renaissance IPO ETF (IPO), which invest in companies associated with cloud-based software or IPOs respectively, as a way to gain exposure to this growing market.
Furthermore, once Rippling goes public, investors may want to research the company's financial performance and investment potential, including factors like its revenue growth, gross profit margins, insider ownership, and net profitability, before deciding whether to invest in its stock.
