Chime IPO to test public market appetite for fintech as companies exit

There’s a mini-boom happening in fintech.

After a multi-year IPO slowdown triggered by rising rates and valuation resets, some of the emerging players in online stock trading, banking, lending and crypto-related services are hitting the public market, or at least preparing for a debut.

The next test of Wall Street’s enthusiasm is expected to come on Thursday, when Chime is slated to start trading on the Nasdaq. The provider of online banking services offered a price range of $24 to $26 a share, which would equate to a market cap of about $9.1 billion in the middle of the range, though that number would be higher on a fully diluted basis. The IPO pricing is scheduled for later Wednesday.

That’s a big step down from where venture investors like Sequoia Capital valued the company in Chime’s last fundraising round in 2021, when private tech markets were raging. The reported valuation at the time was $25 billion, and Chime’s IPO prospectus says the share price was $69. It’s a dynamic that’s playing out across the industry, as tech executives and investors reckon with a new reality.

David Golden, a longtime fintech investor and partner at Revolution Ventures, said that in 2021, capital was so abundant that “equity was basically free,” making it possible to sell stock “for any price under any circumstances.”

“You saw a valuation reset in the market,” said Golden, who previously led JPMorgan Chase’s tech investment banking practice. Now the window appears to be open, and “they basically said, ‘Look, we don’t really need the money, but we think it’s time,'” Golden said.

A Chime spokesperson declined to comment.

There are reasons for optimism.

Lat month, trading app eToro debuted on the market and jumped 29% on its first day, though the stock hasn’t done much since. That same week Mike Novogratz’s crypto firm Galaxy Digital finally made its U.S. debut, uplisting from the TSX.

Then came crypto company Circle, whose blockbuster listing helped solidify what now looks like a true reopening of the fintech IPO market. Circle is trading at over $118 for a market cap of $26 billion, after pricing its offering at $31.

Others are on the horizon. Klarna, a provider of buy now, pay later loans, filed its prospectus in March but then delayed its offering a month later after President Donald Trump’s sweeping tariffs roiled markets. The company hasn’t provided an update on its timing, but in May reported nearly $100 million in quarterly losses.

Gemini, the crypto firm founded by the Winklevoss twins, said last week that it confidentially filed for an IPO. Bullish, a crypto exchange backed by Peter Thiel, has also filed confidentially for an IPO, according to a report on Tuesday from the Financial Times. 

Going public for companies like Chime requires a recognition that the market has fundamentally changed from where it was a few years ago. For Sequoia, SoftBank and Tiger Global, who all wrote checks in Chime’s 2021 financing round, that means taking a haircut on that investment and hoping Wall Street helps them recover.

Stripe, the most highly valued U.S. fintech, has almost gotten back up to its peak. After raising at a $95 billion valuation in 2021, the company slashed that number by almost half to $50 billion in 2023. Early this year, it climbed back to $91.5 in a tender offer for employees and shareholders. But Stripe has shown no urgency to hit the public market, as it’s able to regularly hold secondary offerings.

For Chime, revenue in the latest quarter climbed 32% from a year earlier to $518.7 million. Net income narrowed to $12.9 million from $15.9 million a year ago.

“They believe there’s enough support in the public markets to raise meaningful capital and gain an acquisition currency to go out and acquire other companies,” Golden said.

Even with the lowered valuation, Chime’s IPO will still create big paydays for earlier backers like DST Global and Crosslink Capital, the biggest outside investors in the company.

Silicon Valley investors are desperate for returns after an extended drought. While exits for venture firms in the first quarter hit their highest quarterly value since the fourth quarter of 2021, nearly 40% came from a single IPO, according to the National Venture Capital Association and PitchBook. That IPO was CoreWeave, a provider of artificial intelligence infrastructure.

Ryan Gilbert, general partner at Launchpad Capital, said “sponsors and advisors are very realistic” about the market conditions and “realize the window is open.”

“But I don’t think they know how high the window is up from the floor,” Gilbert said. “And I think would much rather get the IPO done and start trading than risk aggressive pricing.”

He said that Chime is a business that spent a lot of money on luring customers, which is a big challenge for smaller companies that lack universal brand recognition. According to its prospectus, Chime paid the NBA’s Dallas Mavericks roughly $33 million over three years to have its logo worn as a patch on player jerseys.

Chime now has to prove it can take advantage of all that marketing spend and retain customers as it competes with incumbents like Square, PayPal and SoFi.

While Chime isn’t a bank, most of its services sit at the core of consumer banking. It primarily generates revenue through interchange-based fees on debit and credit card transactions.

“It’s pretty simplistic,” said Dan Dolev, an analyst at Mizuho. “I’m actually surprised by how unsophisticated that business model is.”

How well the market receives that model and Chime’s story could have a big influence on the rest of the fintech space.

“I think they’re going to look at Chime as a potential canary in the coal mine,” Golden said. “If it goes well — and you’ll know that in the next two to three months — I think you’ll see much more receptivity” from other companies in the pipeline, he said.

“If it doesn’t go well,” Golden added, “I think they’ll continue just to sit on their hands and wait it out.”

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