With Fintech shares down 40%, Chime delays IPO
Digital bank Chime is delaying its IPO until the second half of this year, likely until the fourth quarter, according to a person familiar with the matter. last fall, Forbes reported that Chime was targeting March 2022 to go public at a valuation between $35 billion and $45 billion. Chime has pushed back its IPO schedule as it focuses on releasing new products, which could include lending or investment features, the person said. Its target valuation has not changed.
Listed fintech stocks have fallen 40% since late October 2021, with companies like Block and PayPal down 60%. Chime’s decision to delay its IPO was made before shares began to fall, the person claims. A spokesperson for Chime did not respond to Forbes’ request for comment.
As a digital banking service, Chime offers checking accounts with no monthly fees or overdraft fees and has signed up millions of customers among low- and middle-income Americans. In August 2021, the nine-year-old San Francisco company raised $1.1 billion in venture capital at a $25 billion valuation.
While neobanks continued to grow rapidly last year, they grew at a slower pace than in 2020, when the pandemic led to a surge in e-commerce and online banking. In 2021, Chime’s revenue hit nearly $1 billion, according to a person familiar with its business, up from around $600 million the year before. Revenue had tripled in 2020 compared to 2019. Current, a New York-based digital bank and competitor to Chime, has also grown rapidly. The total number of registered users grew by around 50% in 2021 and more than 200% in 2020. Current now has 3.7 million registered customers.
Fintechs including Chime have seen a wave of fraud since the onset of Covid, with retailers like Avis and Hertz even instituting bans on Chime Cards and Cash App in 2021 to limit illicit activity. (Chime said rental companies need to be more careful about who they rent cars to.) Robinhood barred transfers from a list of financial institutions, including many midsize banks that s ‘associate with fintechs, as a brutal tool to fight against fraud. Fraud issues haven’t affected Chime’s IPO timing, says a person familiar with its operations.
As fintech stocks tumbled, some investors, especially those betting on private and public companies, began demanding lower valuations for startups. The stock sell-off had a chilling effect on the IPO market, which saw a record number of fintechs going public in 2021.