Updated at 4:10 pm ET to reflect the stock’s day-end closing price.
Digital bank Chime went public on the Nasdaq stock exchange today, and its stock rose 37% to $37 per share, bringing its valuation to $16 billion when factoring in the total number of outstanding shares reported by FactSet. (In the first few minutes of trading, Chime’s price hit a peak of $44.94 and then hovered between $35 and $40 for most of the day.) The company raised $684 million in the initial public offering (IPO).
The IPO pop follows two other successful public debuts over the past month, with crypto stablecoin company Circle seeing its share price rise 168% last week and stock trading app eToro rising 29% in May. The last five years have been turbulent for the financial technology industry, making this new group of IPOs a relief for fintech investors and executives.
Founded 13 years ago, Chime grew popular by offering a free checking account and debit card where consumers could get access to their paycheck two days before other banks made it available. Catering to lower and middle-income consumers, it has built a sticky business by requiring customers to set up direct deposit (of paychecks or other income) to get access to a growing list of features, including small loans and a secured credit card. “Our customers are everyday consumers who make $40,000 or $50,000 a year and just don’t think highly of the incumbents anymore. They’re looking for a new approach,” Chime cofounder and CEO Chris Britt told Forbes today, speaking from the Nasdaq stock exchange in New York’s Times Square.
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During the pandemic, Chime grew extremely rapidly, tripling its revenue in 2020 and hitting a valuation of $25 billion in a 2021 venture capital fundraise. Fintech valuations fell dramatically over the next two years, after interest rates rose and the bubble burst. Chime’s current $16 billion market value, while below its peak, is double the $8 billion Forbes estimated it at a year ago. Cofounders Chris Britt and Ryan King each own 4% to 5% of Chime, making their stakes worth $700 to $800 million apiece.
The San Francisco company has maintained rapid growth–last year its revenue rose 31% to reach $1.7 billion–but it has spent heavily to get there, burning $520 million in 2024 on marketing and sales. How can it attract and retain customers more profitably? “The most important thing we need to do is continue to innovate in the area of product,” Britt says, referring to Chime’s app and its banking features. Innovation drives low-cost, word-of-mouth referrals, which Britt says are the top way new customers come in the door. Chime has 8.6 million active customers today but wasn’t profitable in 2024, losing $25 million. So it will need to find cheaper ways to attract and retain customers if it wants to become much more profitable.
Chime makes more than 70% of its revenue on interchange, the 1% to 2% fees merchants pay to accept debit and credit cards at checkout, and it started expanding into small-dollar lending over the past several years. Lending represents a huge profit opportunity: it’s what makes banks among the most profitable companies in the world. Yet it’s also risky. Chime’s “transaction and risk losses”—an unusual metric Chime reports that lumps together losses from lending, disputed charges and fraud–surged from 9% of Chime’s revenue in the first quarter of 2024 to 21% in the first quarter of 2025. Investors should closely watch how these credit losses evolve over time, especially if the economy sours and unemployment starts to rise.
Britt expects interchange revenue to remain the company’s main focus. “We intend to stay with a payments-driven business model for the foreseeable future,” he says. As Chime has added more products, it has seen the amount of money people spend on their Chime cards increase, which leads to more interchange revenue. Britt adds that Chime might offer “an unsecured credit card at some point.”
Since the company’s founding, the CEO has maintained a dogged commitment to providing banking services for little to no fees and has relied on interchange revenue. One example: Chime has never offered a subscription service for a monthly fee, though subscriptions have become common practice among fintechs. Britt also says Chime’s $2 instant transfer fee for its MyPay cash advance service is lower than what other fintechs charge for instant transfers.
The CEO likes to point out how traditional banks aren’t set up to profitably serve most Americans. He cites JPMorganChase CEO Jamie Dimon’s shareholder letter from April, in which Dimon said that most of Chase’s accounts are low-balance accounts. Dimon wrote, “For these lower balance accounts, our costs to maintain and operate them are far greater than what we make from them.”
Britt says of big banks, “Their cost structure and their product approach does not work well for the 75% of Americans that make up to $100,000 a year … They lose money on this population. So that’s the opportunity we have.”
