The fintech company Chime Financial (NASDAQ: CHYM) debuted on the market last week, initially surging nearly 40% above its IPO price of $27 to open at $43. As of now, the stock is trading just below $35, reflecting typical post-IPO volatility. Chime, a digital bank focused on low-cost financial services, estimates it reaches less than 5% of the 200 million Americans earning under $100,000, indicating significant growth potential. In 2024, the company’s revenue grew by over 30%, and it was profitable in the first quarter of 2025.
Chime generates most of its revenue through interchange fees, avoiding traditional banking risks by partnering with established banks. However, challenges include heightened competition in the neo-banking space and reliance on transaction fees, which could be impacted by economic downturns. Currently, with a market cap of about $12 billion, Chime trades at roughly 7 times its trailing revenues, raising questions about its valuation amid improving profitability and growth.
