- Chime’s IPO, priced at $24–26 per share, is much lower than its 2021 valuation of $25B.
- The outcome of this offering could affect other fintech companies planning to go public.
What happened: Chime’s IPO faces market challenges
Chime, the online banking service provider, is set to begin trading on the Nasdaq this Thursday. The company has priced its IPO between $24 and $26 per share. This would give the company a market value of about $9.1B, which is much lower than its previous $25B valuation in 2021. The fintech company’s last fundraising round came during a strong tech market, but that has since changed.
Still, there is some hope around Chime’s IPO. Other fintech companies, like eToro and Circle, have recently made successful market debuts. However, there are concerns about companies like Chime, which mainly earn money from interchange fees on debit and credit card transactions. Their simpler business model might not stand out in the long run.
Also read: Japanese chipmaker Kioxia plans Tokyo IPO to fuel growth
Also read: Klarna’s IPO: A bold step toward U.S. market dominance
Why it’s important
Chime’s IPO is important for the wider fintech industry. If it succeeds or fails, it could impact other tech firms planning their own initial public offerings (IPOs). Many fintech companies, such as Klarna and Stripe, have delayed their public listings, but Chime’s decision to proceed could encourage others to do the same.
For Chime, the goal is to raise capital and gain “acquisition currency” to expand by buying other companies. With a $30M marketing deal to put its logo on Dallas Mavericks’ jerseys, Chime wants to keep customers as it competes with larger fintech companies like PayPal and Square. But its business model, based on simple interchange fees, may make it harder for Chime to stand out in a crowded market.
