By Paul R. La Monica
Ding-dong! The IPO window appears to be opening again following the well
received debut of the stablecoin company Circle last week. This week, another fintech, Chime Financial, is hoping to wow Wall Street with an initial public offering.
Chime, a so-called neobank offering checking and savings accounts, debit and credit cards, and other financial products online, is popular with millennials and other younger consumers. The average age of a Chime customer is 36, according to the company's IPO filing with the Securities and Exchange Commission.
Chime, which competes both with traditional banks and fintechs like SoFi, Ally, Affirm, Klarna and PayPal, is planning to list 32 million shares at a range of $24 to $26 each. At $25, the company and other selling shareholders would raise $800 million from the sale, while Chime would have a market valuation of around $10 billion. That is a big discount to the $25 billion valuation for Chime, based on its last round of private financing.
The company will trade under the symbol CHYM on the Nasdaq.
Given the robust demand for Circle -- it raised its offering range, boosted the number of shares it planned to sell, priced its stock above that range, and then soared nearly 170% on its first day of trading -- it wouldn't be a huge surprise if Chime also had a very strong showing. The recent market debut of the crypto brokerage firm eToro, which priced its IPO last month at $52 and now trades around $77, is another encouraging sign.
"Chime's decision to tap the public markets, even amid market jitters, represents another win for the fintech sector," said Rudy Yang, senior fintech analyst with PitchBook, in a report. "Their IPO will follow those from eToro and Circle, both of which generated oversubscribed books and validated that there is legitimate investor demand."
With that in mind, here are some key questions and answers about Chime.
Is Chime a bank? No. Chime bills itself as a technology company, not a financial institution. Some might refer to it as a neobank. That's because Chime works in partnership with two companies that are registered as actual banks: The Bancorp Bank and Stride Bank. Those two entities are insured by the Federal Deposit Insurance Corp. So even though Chime isn't insured by the FDIC, the company says customer deposits are safe thanks to its financial partners.
What does Chime do? In addition to offering online services through its partners, Chime is probably best known for its MyPay feature, which lets customers access $500 from their paychecks early as a line of credit. Chime offers the service for free for those willing to wait 24 hours and charges a fee to customers who want the money instantly.
Wait. Isn't that just a pricey payday loan? Chime says it doesn't act like some controversial payday lenders, which tend to charge usurious interest rates.
"MyPay has transformed the way Americans can access their pay, offering members early access to their wages without incurring expensive debt," the company said in its IPO paperwork with the SEC. The overwhelming majority of MyPay customers either stopped using payday lenders, or use them less often, according to Chime.
Okay. So is Chime profitable? No. And that is a big difference between it and Circle, which earns interest from the cash and short-term Treasuries it holds on its balance sheet to back the company's USDC stablecoin.
Chime has been losing money for the past few years, although the losses have narrowed lately. It reported red ink of $470.3 million in 2022, a net loss of $203.2 million in 2023 and $25.3 million in losses last year.
The top line, on the other hand, is growing dramatically. Revenue rose 31% in 2024, to $1.7 billion from $1.3 billion a year earlier. Revenue was up 32% in the first quarter of 2025. Chime primarily generates revenue from so-called interchange fees paid to Chime by the big credit and debit card networks when consumers use Chime-branded cards.
Who has already invested in Chime? Two of the company's co-founders, CEO Christopher Britt and board member Ryan King, will have overwhelming control over the company. They each own a large amount of Class B shares, which have more voting power than the Class A shares being sold in the IPO. Britt and King, who aren't selling stock, could collectively have 74.5% of the voting rights.
Several top venture-capital firms, including DST Global, Crosslink Capital, General Atlantic, and Menlo Ventures, are also big owners of the Class A shares.
So should I buy Chime on IPO day or not? As is the case with any IPO, or any stock, it depends on how much risk you are willing to take. Unless you are able to get shares at the IPO price from your broker, you would be buying once shares start trading. And that could be at a significantly higher price.
Big mutual funds, hedge funds, and other clients of the top investment banks that are helping to underwrite the deal, which includes Goldman Sachs, Morgan Stanley and JPMorgan Chase, will have the best access to shares at the actual offering price.
If Circle, which priced its IPO at $31 and opened at $69, is any guide, Chime could pop right out of the gate, meaning that retail investors will be paying a significant premium. So far, it has worked out well for Circle investors because the stock has continued to climb, trading at around $110 on Tuesday.
Another point to watch is when existing investors will legally be allowed to sell shares in the IPO. Typically, lockups expire after 180 days.
But PitchBook's Yang notes that Chime has a partial lockup release at 90 days that allows employees to liquidate a quarter of their shares. That "could introduce early selling pressure," Yang said.
So even if Chime gets off to a hot start, the stock could cool in just a few months.
Write to Paul R. La Monica at paul.lamonica@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 10, 2025 10:29 ET (14:29 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.