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Will Chime IPO Stock Become Next Big IPO?

Cameron Murphy

May 06, 2022 17:02

Chime Stock Information

Chime is a neobank with cheap fees, higher-yielding savings accounts, and a user-friendly mobile app.


Chime is an internet bank that offers clients checking and savings accounts. The firm claims there are no monthly fees, open deposit restrictions, minimum balances, or foreign transaction costs for its banking services. Chime also promotes advantages such as early direct deposits and automated savings.


Chime was formed by Chris Britt and Ryan King in 2013 and is based in San Francisco, California.

General Atlantic, DST Global, Menlo Ventures, Aspect Ventures, and Cathay Innovation are among the notable investors.


What Is Chime's Current Market Value?

According to its most recent financing round, the Chime is valued at $25 billion and garnered $750 million in August 2021. Before this, the company was valued at around $14.5 billion in September 2020, following a $200 million Series F round that month. The firm was valued at $1.5 billion only three years ago, indicating significant growth in recent years.

Who Are Chime's Main Rivals?

Neobank and challenger bank operators like Revolut in the UK, N26 in Germany, and Nubank in Brazil, as well as digital wallets like Venmo and bill-splitting provider GoDutch, are among Chime's rivals.


Many of these companies have complex and varied offers, but Revolut is one of the most well-known global players in pure digital banks, with more than 14.5 million clients worldwide as of August 2021.

Revolut is also one of the few companies in the market that have achieved some profitability, with statistics expected to become positive in the second half of 2020.


Varo received certification from the Federal Deposit Insurance Corporation to provide banking services in 2020 and might be a solid competitor to Chime in the future.


Online banking startups operate in a relatively new field that is still maturing. In December 2020, Exton Consulting conducted research and discovered 256 'neobanks' throughout the globe. However, we may anticipate many mergers and acquisitions in the future. As the industry evolves and more customers migrate away from "conventional" banking services, some players will inevitably rise from the pack.

What is Chime's Revenue Model?

Chime generates money mainly by collecting a cut of the transaction fees paid by Visa to retailers when customers use the Chime debit card. Like competitors like Revolut, Chime is expected to look for income diversification opportunities.

What Is The Business Plan of Chime?

From the start, Chime's business plan was to provide banking services that provided 'financial peace of mind' to those Americans who did not belong to the top 25-30 percent of salary earners. This included looking at alternatives to typical fee-based revenue structures used by established banks and developing a community of engaged consumers who are ideally more financially knowledgeable than those serviced by incumbents.


According to Britt, many of the company's services, such as early paycheck access and overdraft protection, are geared to alleviate short-term financial difficulties. These are the kind of features that lead to recommendations.


Indeed, the firm has acquired customers primarily via recommendations and through organic methods and word of mouth. The company's interchange, as mentioned earlier, fees, and potential ambitions for a goods marketplace, credit, and loans, might potentially boost profits.


Traders and investors interested in a Chime IPO will be keeping a careful eye on this product's progress in the future. As with any embryonic industry, competitors are still experimenting and finding their feet in terms of the best features to connect with their userbase. For challengers and neobanks, the road to profitability has been anything but straightforward. However, if a potential firm can get there, Chime has in-house resources and experience to overcome challenges and become a sector leader.

Is Chime Financially Viable?

According to Britt, during the worldwide coronavirus epidemic in 2020, Chime became profitable in terms of EBITDA, told CNBC in September of that year.


Chime's Owner

Chime is owned by several people, including the founders Britt and King, and several investment firms that have purchased holdings along the road, including Sequoia Capital, Tiger Global Management, and Japan's Softbank.

When Will Chime Go Public?

If you're looking for a specific date on the IPO calendar for Chime's public market debut, you may have to wait a while. The company plans to go public in March 2022.


The business raised $485 million in its most recent fundraising round. Chime is now worth $14.5 billion, making it one of America's most valuable consumer finance companies.

Financial History of Chime

Chime has yet to submit its Form S-1 with the Securities and Exchange Commission (SEC). It is impossible to evaluate Chime's financial success without this paper.


However, when the public markets became more frothy, many institutional investors began to place a more significant focus on pre-IPO businesses. Furthermore, with popular speculative trades like cryptocurrency lately suffering extreme volatility, institutional investors are expected to continue to back IPO-ready companies with relevant companies and technology.


Chime is a unique player in the private equity finance industry. The fintech startup has raised approximately $1.5 billion since August 2013. DST Global, Menlo Ventures, Cathay Innovation, Aspect Ventures, and Crosslink Capital have all been early investors.


Because of the strong institutional interest in Chime, management has a few choices for going public.

It may, of course, go the customary route or list its shares. Chime could also be a target for a reverse merger through a particular purpose acquisition company (SPAC).

Chime Potential

Despite the lack of financial specifics, the Chime IPO offers potential room for growth. Major investors have given the firm a unicorn value. That's not a trivial point to overlook, particularly in this frantic market climate when the value of everything seems to have risen.


Concerns about COVID-19 and its mutations may continue to encourage the use of fintech platforms and contactless services. Chime has a market capitalization of $14.5 billion, making it one of the most valuable consumer fintech companies in the United States. That's around 27% of the US population, so many people are still unvaccinated. Neobanks may profit from increased demand for safety reasons.


Millennials in large cities discarded cash for credit cards, alternative payment methods, and mobile applications well before the epidemic. Millennial trends will significantly influence the consumer sector since they constitute the most significant cohort in the US workforce.

How to Purchase Chime Initial Public Offering Stock

Because the Chime IPO is expected to be delayed, individual investors may have two alternatives. First, if Chime decides to go with a typical IPO, you may attempt to purchase shares at the first offering price using services that let regular people buy pre-IPO equities.

Chime Stock Market News, Stock Advice, and Trading Tips

According to CNBC, Chime, which maintains a popular mobile banking app, received $485 million in a Series F round in September. The money was valued at around $14.5 billion, more significant than Robinhood's market value of $11.2 billion. Will investors be able to purchase Chime shares anytime soon? Let us investigate.


Access Technology, Coatue, Dragoneer, DST Global, Iconiq, General Atlantic, Tiger Global, and Whale Rock Capital are investors in Chime's newest round. The corporation has raised a total of $2 billion.


The firm was formed in 2013 by CEO Chris Britt and CTO Ryan King to make banking simpler, cheaper, and more convenient. They debuted the app on the Dr. Phil Show in April 2014, which helped generate traffic.


Britt formerly worked for organizations such as Green Dot (NYSE: GDOT) and Visa (NYSE: V). King worked for Plaxo as the vice president of engineering.

The 7 Best Stocks to Buy on the Cheap

There are currently limited facts about the company's traction. However, Chime said last year that it has five million subscribers in the United States. It was the fastest-growing challenger fintech bank at the time. And it's safe to assume that things haven't slowed down either. Customers seeking improved online banking alternatives have certainly pushed for even more significant development due to the Covid-19 epidemic.


Chime Stock: How to Invest

Chime stock may be purchased. However, you'd have to rely on secondary markets. This generally entails making substantial purchases and being an accredited investor (an income of $200,000 or a net worth of over $1 million, excluding your primary property).


However, a Chime IPO will take place, maybe within the following year. However, the corporation is still planning for a public offering, and this might be difficult because of the many regulatory requirements.


However, the present climate is favorable for a Chime IPO. Fintech firms like Square (NYSE: SQ) have outperformed the market because the market potential is immense. Yes, technology IPOs have also been quite popular, and it's as if we've returned to the dot-com era's heyday.


Furthermore, Chime just achieved EBITDA (Earnings Before Interest, Taxes, Debt, and Amortization) profitability, which is uncommon for early-stage companies. In other words, when the IPO becomes public, it should be a hot commodity.


Second, you may wait until Chime makes its shares available to the general public. Although you'll be at a disadvantage because of the expected IPO jump, you won't have to worry about your cash being held up in a pre-IPO investment.


Remember that just because a company is set to go public doesn't indicate it will succeed. The WeWork debacle serves as a warning.


Furthermore, if you choose the latter option, the procedure is simple. You're already ahead of the game if you know how to purchase stocks. If not, go to the procedures below.


It would help if you first chose a brokerage before accomplishing anything in the stock market. Brokers' services used to be priced differently decades ago.


Mobile investing applications have driven brokers to provide considerably more competitive pricing in recent years. Almost every broker, for example, provides the same benefits, such as commission-free trading.


You may now select a brokerage that best suits your requirements and goals. Often, a mobile app can be just what you need if you're often on the run. However, if you want to improve your investment skills, you should look at comprehensive, full-service platforms.

Choose the Number of Shares You Desire

Your share count influences your earning potential and, as a result, your risk. The more Chime IPO shares you hold, the more money you'll earn if the stock rises in value. If Chime's public market debut fails, the inverse is also true. As a consequence, you should save your most important purchases for special occasions.


Whatever number of shares you choose, make a note of it ahead of time; it's nearly always best to trade based on well-thought-out tactics than emotions.

Select An Order Type

Due to continually fluctuating pricing, you must utilize particular order types to perform your transactions. Before you place your first purchase, read the following vital information.


The most significant price a buyer will give for a stock is known as the bid, and it's always less than the request.


The ask, on the other hand, is the lowest price a seller will accept. It will always cost more than the bid.


The spread (sometimes known as the bid-ask spread) is the price difference between the bid and ask. It's also the de facto market liquidity and risk indicator. Narrower spreads suggest more liquidity and, as a result, less risk. That's because if you decide to sell your shares, you'll almost certainly find a buyer. Lower liquidity and greater risk are associated with wider spreads.


A limit order is used to purchase shares at a particular price. Be warned that there is no assurance that the stock will reach the target price. As a consequence, your limit order may be able to be left unfulfilled.


Choose a market order if you wish to acquire shares at the current market price. Your request is instantly fulfilled at the next available price. Keep in mind that purchase orders will be filled at the ask, while sell orders will be filled at the bid.


Stop-loss orders are used to safeguard your investment from volatility. This order type exits you from your position at a preset price or the next available price, whichever comes first. The gap-down session, in which a stock begins substantially lower than the previous day's closing, poses the most danger.


Stop-limit orders are orders that only leave you at a certain price. If, however, your target stock never hits the specified price after a gap-down session, you would have been better off placing a stop-loss order instead.


For a market order, perform these procedures to execute it:

  • Choose an action type (buy or sell).


  • Enter the number of shares you wish to buy (or sell).


  • To begin, press the purchase (or sell) button.


Follow the identical instructions as above for limit orders; only you must additionally specify your preferred execution price.

Retail Investors Face Chime Restrictions

You should read the Financial Industry Regulatory Authority (FINRA) instructions on prohibited people before participating in the Chime IPO. Because of their position as insiders, these people are unable to participate in IPOs.

Pre-IPO Chime

Pre-IPO shares were previously exclusively available to institutional investors and well-connected individual investors. To reward early investors, underwriters provided a discount on what the market may bear for the IPO shares. Regular retail investors may now engage in pre-IPO shares via companies like ClickIPO.


Chime's equity unit is unavailable on ClickIPO since it has not yet registered for its first public offering. However, as the tale progresses, keep an eye on this place.


The Next Generation of Banking Solutions

Chime not only illustrates the progression of consumer behavior but also has a unicorn value. Neobanks is a logical fit for Millennials and Generation Z, who grew up with digital technology. And the pandemic's anxieties may drive several generations to Chime's contactless platform.


Examine Chime's potential before deciding whether or not to participate in the Chime IPO next year.

Chime Postpones Its IPO Due to a 40% Drop in Fintech Stocks

Chime is delaying its initial public offering until the second half of this year, most likely the fourth quarter, according to a person familiar with the issue. Forbes reported last autumn that Chime planned to go public in March 2022 at a value of $35 billion to $45 billion. According to the individual, Chime has pushed back its IPO date because it is working on delivering new products, which might include loans or investment services. Its target price has remained unchanged.


Since late October 2021, publicly listed fintech equities have been down 40%, with businesses like Block and PayPal down 60%. The decision to postpone Chime's IPO was decided before the stock market began to fall, according to the source. Forbes reached out to Chime for comment but received no response.


Chime is a digital banking service that provides checking accounts with no monthly or overdraft fees, and it has millions of clients in the lower and medium income brackets. The nine-year-old San Francisco startup got $1.1 billion in venture finance in August 2021, valued at $25 billion.


While neobanks continued to grow rapidly last year, they did so at a slower rate than in 2020, when the pandemic triggered a surge in e-commerce and online banking. According to a source familiar with Chime's operations, sales hit about $1 billion in 2021, up from approximately $600 million the year before. In 2020, revenue quadrupled compared to 2019. Currently, a digital bank based in New York and a rival to Chime has also risen quickly. In 2021, the number of registered users climbed by around 50% and by more than 200 percent in 2020. There are now 3.7 million registered clients on Current.


Since the introduction of Covid, fintech like Chime has experienced a surge in fraud, with merchants like Avis and Hertz banning Chime and Cash App cards in 2021 to combat the problem. (Rental firms, according to Chime, should be more vigilant about who they hire automobiles too.) As a blunt weapon for combatting fraud, Robinhood has prohibited transfers from a list of financial institutions, including several smaller banks that work with fintechs. According to a source familiar with Chime's operations, fraud issues have had no impact on the company's IPO timetable.