With Fintech Stocks Down, Chime Delays IPO To Second Half Of 2022

Digital bank Chime is delaying its initial public offering 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 had been targeting March 2022 to go public at a valuation between $35 and $45 billion. Chime has pushed back its IPO timeline because it’s focusing on releasing new products, which could include lending or investing features, the person says. Its target valuation hasn’t changed. 

Publicly traded fintech stocks have fallen by 40% since late October 2021, with companies like Block and PayPal off 60%. Chime’s decision to delay its IPO was made before stocks started to tumble, the person claims. A Chime spokesperson didn’t respond to Forbes’ request for comment. 

As a digital banking service, Chime offers checking accounts with no monthly or overdraft fees and has recruited millions of customers among lower 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 expand quickly last year, they grew at a slower pace than they did in 2020, when the pandemic drove an abrupt uptick in ecommerce and online banking. In 2021, Chime’s revenue reached nearly $1 billion, says a person familiar with its business, compared with roughly $600 million the year prior. Revenue had tripled in 2020 versus 2019. Current, a New York digital bank and Chime competitor, has also grown rapidly. Its total registered users increased about 50% in 2021 and more than 200% in 2020. Current now has 3.7 million registered customers. 

Fintechs including Chime have seen a rash of fraud since the start of Covid, with retailers including Avis and Hertz even instituting bans on Chime and Cash App cards in 2021 to limit illicit activity (Chime has said that rental companies need to be more cautious about whom they rent cars to). Robinhood has banned transfers from a list of financial institutions, including many mid-sized banks that partner with fintechs, as a blunt tool for fighting fraud. Fraud challenges haven’t affected Chime’s IPO timing, says a person familiar with its operations. 

As fintechs stocks have slumped, some investors–especially those that place bets on both private and public companies—have started to demand lower valuations from startups. The stock selloff has had a cooling effect on the IPO market, which recorded a record number of fintechs going public in 2021.