A Chime IPO Is Likely Right Around the Corner

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Chime, which operates a popular mobile banking app, raised $485 million in a Series F round this September, according to a report from CNBC. The valuation for the funding came to about $14.5 billion, which is actually higher than Robinhood’s (its market value is $11.2 billion). Now the question is: Will investors be able to buy Chime stock soon? Let’s take a look.

a person putting a coin into a piggy bank

Source: Shutterstock

The investors in the latest round for Chime include Access Technology, Coatue, Dragoneer, DST Global, Iconiq, General Atlantic, Tiger Global and Whale Rock Capital. In all, the company has raised $2 billion.

CEO Chris Britt and CTO Ryan King founded the company in 2013, with the vision of making banking easier, cheaper and more convenient. They launched the app in April 2014 on the Dr. Phil Show, which certainly helped to drive traffic.

Prior to Chime, Britt was an executive at companies like Green Dot (NYSE:GDOT) and Visa (NYSE:V). As for King, he was the vice president of engineering at Plaxo.

Chime: The App

The Chime app has won a myriad of awards and has gotten more than 135,000 five-star reviews on the Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) app stores. Then again, it offers many great features. Here’s a look at the main ones:

  • Direct deposits: You get paid up to two days earlier for your paychecks.
  • Fees: Chime prides itself on not having any hidden fees. For example, there are no monthly charges. There are also no fees for opening an account or making international transactions. In fact, if you lose your debit card, you will get a replacement for free.
  • Savings: You can set up plans to grow your money by using a competitive savings program.
  • Wide distribution: You can use the app to transact on over 38,000 ATMS for free.
  • Payments: The Pay Friends feature allows you to send money to other Chime members.
  • Security: Chime has high-grade systems to protect your account, such as 128-bit AES encryption, instant transaction notifications and access control. There is also the adoption of the Visa Zero Liability Policy.

Keep in mind that Chime partners with two traditional banks. By doing this, customers get the benefit of FDIC deposit insurance and regulatory protections.

Now, there are few details on the traction of the company. But last year, Chime announced that it had five million customers in the U.S. At the time, it was the fastest growing challenger fintech bank. And it seems like a good bet that things have not slowed down either. If anything, the Covid-19 pandemic has likely spurred even more growth as customers have looked for better online banking options.

How to Invest in Chime Stock

It’s possible to buy Chime stock. But you would have to use the secondary markets. This usually involves making large purchases and also being an accredited investor (this means having a salary of $200,000 per year or a net worth of over $1 million, excluding your prime residence).

But it does look like there will be a Chime IPO — and it could happen within the next year or so. Although, it appears that the company is still in the process of preparing for an offering. Because of the extensive regulatory requirements, this can certainly be onerous.

Yet the current environment is certainly ideal for a Chime IPO.  Let’s face it, fintech stocks like Square (NYSE:SQ) have been top performers, as the market opportunity is enormous. And yes, tech IPOs have also been extremely popular. It’s as if we are back to the boom times of the dot-com era.

Besides, Chime has recently become EBITDA (Earnings Before Interest, Taxes, Debt and Amortization) positive, which is fairly rare for early-stage startups.  In other words, when the IPO hits the market, it should be a red-hot deal.

On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.

Tom Taulli (@ttaulli) is an advisor/board member for startups and author of various books and online courses about technology, including Artificial Intelligence BasicsThe Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s. 

The post A Chime IPO Is Likely Right Around the Corner appeared first on InvestorPlace.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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