Ripple Labs’ native token, XRP, is losing appeal among investors seeking more attractive opportunities. A glance at the market activity shows that the seventh-ranked crypto by market capitalization of $34 billion has its price-to-sales ratio nearly doubling the stock of the largest global chipmaker, Nvidia.
The price-to-sales ratio is critical for assessing investment potential since lower figures indicate a more attractive opportunity. A higher price-to-sales ratio suggests declined attractiveness for investment.
XRP Lose Investment Appeal
The XRP token’s ratio nearly doubles Nvidia’s price-to-sales; it affirms its declining attractiveness relative to the potential attached to one of the frequently traded stocks.
The XRP’s price-to-sale ratio is 61.689 compared to Nvidia’s relatively low ratio 37. The ratio represents the company’s market capitalization by revenue over the previous 12 months. A lower ratio suggests more attractiveness of the investment relied upon in the wake of automated trading via bots such as Code Trader Bot 1000.
A reflection on the 2023 performance by the two companies shows that Ripple Labs XRP ledger realized over $583,000 in network fees last year, per Messari data. In contrast, Nvidia’s annual earnings were $26.97 billion, as illustrated in its 2023 fiscal report.
Nvidia Rides High as Chipmaker Consolidates Investment Attractiveness
The declining attractiveness of XRP tokens is evident in the token’s modest rise of 20.55% in 2023. In comparison, the stock of Jensen Huang-led NVIDIA Corporation (NVDA) rose by 241%. The latter’s spike is attributed to expectations for record revenue as the global demand for semiconductor chips proliferated, particularly those destined for high-level AI models.
A reflection of the market activity today shows that the XRP token suffered mild changes to exchange hands at $0.6205, a 0.5% decline in the past seven days. At press time 13:42 UTC, $1.877 billion is realized as daily trading volume of XRP as per CoinGecko data.
According to Nasdaq data, Nvidia shares are up by 1.4% to exchange hands at $904.74. The third-largest corporation by market capitalization of $2.25 trillion tested a low of $891.93 and a high of $906.79.
Nvidia Corp attained 265% year-on-year growth in its earnings, following the rising demand for AI equipment.
Lawsuit Holding XRP Price Back?
Scrutiny into the XRP price shows that Ripple Labs has faced intense pressure from the regulators since December 2020. The legal burden began when the US Securities and Exchange Commission (SEC) leveled charges against Ripple Labs, chief executive Brad Garlinghouse, and fellow co-founder Chris Larsen.
The securities watchdog claims that Ripple Labs benefitted from fundraising $1.3 billion by offering unregistered securities via the XRP token sales. The case dragged on for several years till July last year when the federal court Judge Analisa Torres delivered a partial victory for Ripple.
Judge Torres held that XRP offered to the retail investors via the programmatic sales on various digital asset exchanges does not constitute a security as per the Howey Test framework. However, the judge termed XRP offered to the institutional investors meets the Howey Test conditions, thus a security.
XRP’s high price-to-sales ratio shows that the legal burden holds back the token at a time when the global market is portraying a resilient recovery. A recent disclosure by Ripple Labs chief legal executive Stuart Alderoty on Monday, March 25, indicated that the SEC seeks $1.95 billion in penalties alleging law violation despite several legal warnings.
