Chime closes up 37% in Nasdaq debut after raising $700M in IPO – News

Investors in Chime Financial Inc. had much to cheer about today after the financial services company closed its first day of trading on the Nasdaq up more than 37% after the company’s shares made their debut on the exchange at the start of trading.

The company, which revealed it had filed paperwork to go public with the U.S. Securities and Exchange Commission in May, priced shares for its initial public offering at $27, with Chime raising about $700 million. A further $165 million in shares were offered by existing investors.

Chime closed its first day of trading with a share price of $37.11. The company’s stock rose a bit more after-hours, trading just over $38 per share.

Coming into its IPO, Chime disclosed that it had generated $12.7 million in net income on revenue of $518.7 million, up 32% year-over-year in the March quarter, making it a somewhat rare tech-related company to go public while already profitable.

As of the end of March, Chime also had 8.6 million active customers, which it calls members, up 23% year-over-year and average revenue per active customer was $251, up from $231 in the same quarter of the previous year.

Founded in 2012, Chime pitches itself as a more consumer-friendly alternative to traditional banks with an added emphasis on transparency and low fees. The company partners with FDIC-insured banks like The Bancorp Bank and Stride Bank to provide banking services while focusing on mobile-first, digital-only delivery.

Chime’s offerings include a fee-free checking account, a high-yield savings account and a secured credit card called “Credit Builder,” which is designed to help users improve their credit scores. Complimentary offerings such as “SpotMe” allow customers to overdraft their accounts up to a certain limit with no fees and a service called “MyPay” provides early access to paychecks.

Chief Executive Officer Chris Britt says the company has built a loyal user base, particularly among customers earning $100,000 a year or less, a group often overlooked by traditional banks.

“Two-thirds of our customer base use us as their direct deposit account and primary account relationship,” Britt said in an interview with CNBC. “We help our members avoid fees, get access to short-term liquidity, build their credit and build their savings — and it’s that combination of services that really resonates and matters most to the everyday consumer.”

The positive result from the IPO is not only a win for Chime’s investors but is also another sign that markets are growing more receptive to public offerings, following the successful debut of Circle Internet Group Inc. on the New York Stock Exchange on June 5.

Circle saw its shares close their first day of trading up 168%. The shares, which debuted at $31 each, closed regular trading today at $106.54, indicating that it wasn’t just first-day hype behind the demand. Chime will also be hoping for its share price to remain strong and unless there is an unexpected market correction, given the company’s strong fundamentals, there in no reason to think that they won’t.

Photo: Chime/X