Chime, a provider of online banking services, priced its initial public offering (IPO) at $27 per share on Wednesday, valuing the company at $11.6 billion. The company raised approximately $700 million in the IPO, with existing investors selling an additional $165 million worth of shares as part of the offering.
Trading Details
- Trading in Chime’s stock is set to begin Thursday under the ticker symbol CHYM.
- Recent notable stock market debuts include:
- eToro’s 29% jump in its Nasdaq debut last month.
- Circle’s strong performance after hitting the market last week.
Market Context
While some companies are experiencing success with their IPOs, others are facing challenges:
- Online lender Klarna has delayed its IPO plans and reported significant quarterly losses last month.
Investor Backing
Chime has received backing from several prominent investors since 2021, including:
- SoftBank
- Tiger Global
- Sequoia Capital
Regulatory filings indicate that:
- DST Global owns approximately 17% of shares before this sale.
- Crosslink Capital holds around 9.5%.
Company Background
Chime was founded by Chris Britt and Ryan King in 2013 with a focus on providing low-fee banking services to consumers who lack traditional bank accounts or prefer more convenient access to their money through mobile apps or debit cards instead of branches or ATMs.
Growth Expectations
Chris Britt expressed optimism about Chime’s future growth, stating:
- The company plans to expand into new areas, such as lending products for personal loans related to home improvements or weddings.
- Britt believes that Chime can achieve profitability next year, attributing this to their ability to keep costs down by leveraging technology instead of maintaining physical branches.
Financial Performance
- Revenue has grown about 70% annually over each three-year period from fiscal years ending March 31.
- Net income attributable rose from $24 million for the fiscal year ending March 30, 2020, to $145 million for the fiscal year ending March 30, 2022, before experiencing a slight decline during pandemic-related disruptions in the first half of the current fiscal year, followed by a strong rebound in the second half.
Customer Growth
- Chime’s customer base has grown by about two-thirds annually over each three-year period.
- Average monthly active users have also increased at a similar rate.
- Net revenue per user has risen by roughly one-third annually over the same periods.
Britt acknowledged that while competition exists within the fintech space, none have achieved the same scale as Chime. He noted that growth rates may slow somewhat going forward due to the company’s increasing size, but he still sees "a lot more room" for expansion.
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