Chime IPO: what you need to know and how to buy shares
Here’s everything you should know about the upcoming initial public offering (IPO) of US fintech unicorn, Chime Financial, Inc.
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When could the Chime IPO happen?
The Chime IPO was initially slated to take place in the first half of 2022. The company has delayed this to some time in the second half of the year instead, in light of plunging financial technology stock prices.
CEO and founder Chris Britt had said at the end of 2020 that the company would become ‘IPO ready’ in a year’s time.
Chime IPO: how to buy shares if and when the company lists
- Do your research on Chime
- Decide whether you want to trade or invest
- Open an account
- Search for Chime on our platform or app and open your position
If you want to buy Chime shares and own them, you'd open a share dealing account. If and when Chime lists in the US and offer a primary market, you'd be able to buy shares at the IPO price with us ahead of the listing for zero commission.
Otherwise, you can invest in Chime stock right away on the day of the listing. It'll cost £3 commission if you've traded 3+ times in the previous calendar month, or £8 if you have not.
If you want to trade Chime shares with derivatives, you would open a spread betting or CFD trading account. Spread bets are commission-free, while CFDs incur a $15 commission on US shares. When trading, you can go long or short and you'll trade on leverage. This means you could gain or lose money much faster than you'd expect, as your trade size is much larger than your initial outlay.
What does Chime do and what is its business model?
San Francisco-founded Chime provides digital banking services via its mobile app of the same name.
However, Chime is not a bank. It is a fintech company with a platform that provides traditional banking services such as ATM withdrawals, savings and checking accounts and overdraft loan facilities, among others.
And unlike traditional banks with physical branches, Chime works with regional banks (like The Bancorp Bank and Stride Bank) to provide ‘basic banking services’ that ‘should be helpful, easy and free’.
As Britt stated in an interview, Chime is ‘more like a consumer software company than a bank’. The platform also uses ‘a transaction-based, processing-based business model that is highly predictable, highly recurring and highly profitable’.
As part of its commitment to being ‘easy and free’, Chime does not charge any account opening, monthly or overdraft fees. It also does not require an opening deposit or minimum balance to open or maintain a checking account.
Who are Chime's competitors?
Chime’s main competitors include Ally, Varo, Wise and Revolut.
Like Chime, Ally is a digital banking service provider that offers checking accounts without monthly fees and minimum balance requirements, as well a suite of other products including loans and mortgages.
Varo, which has a network of over 55,000 ATMs (versus Chime’s network of over 60,000 ATMs), does not require credit checks for its accounts. It also does not charge monthly fees and overdraft charges.
Wise is accessible via a mobile app or its website. It does not charge any fees to open personal accounts, and also has no minimum balance requirement.
Revolut, whose IPO is also approaching, offers a range of traditional banking and financial services, including multi-currency (such as British pound and euro) bank accounts and fee-free currency exchange via its app.
What is Chime valued at and what could the Chime share price be?
Chime’s last funding round in August 2021 saw the start-up raise $750 million. This sets the company’s market valuation at about $25 billion.
This is a huge jump from Chime’s earlier valuation of $1.5 billion in 2019.
As of February 2020, Chime stated that it had eight million account holders on its platform. In 2021, its revenue hit nearly $1 billion, up from approximately $600 million one year prior.
Before the postponement of its IPO, Chime had been targeting to sell its shares at a valuation of $35 billion to $45 billion.
There is no word yet on what Chime’s launch share price will be. Details are expected to be announced closer to the IPO date.
What is the outlook for the Chime IPO?
The outlook for Chime’s imminent flotation remains cautious at best for now, with publicly traded fintech stocks like PayPal and Robinhood having fallen over 50% in 2022 alone.
The company, however, continues to focus on launching new innovative products and solutions, including a secured credit card with no annual fee or interest charges.
A large part of Chime’s earlier growth had also been predicated on serving the needs of US customers who have become disillusioned with traditional banks, or younger customers who prioritised convenient banking at their fingertips.
With consumer habits having evolved during the pandemic, Chime seems poised to capitalise on the changing needs and demands.
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