Chime valued at $18.4 billion as shares soar in Nasdaq debut

By Manya Saini, Niket Nishant and Hannah Lang

June 12 (Reuters) - Chime Financial's CHYM.O shares surged 59% in their hotly anticipated Nasdaq debut on Thursday, valuing the digital bank at $18.4 billion and extending a winning streak for new stock market listings.

The San Francisco-based company's stock opened at $43, compared with the IPO price of $27. It was last trading at $39.90.

If momentum holds in the next few weeks, Chime could reinvigorate confidence among other players in the fintech industry, where valuations have cooled from pandemic-era highs.

"A strong debut could trigger a domino effect, prompting other high-growth firms to accelerate their IPO timelines and position themselves for a window that's starting to reopen," said Kat Liu, vice president at IPOX.

"If well-received, Chime could help reopen the IPO window for other long-delayed unicorns."

The company, along with some of its investors, sold 32 million shares at a price above the marketed range to raise $864 million in the IPO.

Chime was last valued at $25 billion after a funding round in August 2021. The company counts Yuri Milner's DST Global and investment firms General Atlantic and ICONIQ among its backers.

It has raised $2.65 billion from private investors since its inception, according to PitchBook data.

Digital banks such as Chime have grown rapidly in recent years by offering low-cost, mobile-first financial services that appeal to younger users and underserved consumers.

With features such as no-fee accounts, early access to direct deposits and user-friendly apps, they have positioned themselves as accessible alternatives to traditional banks.

The fintech earns revenue primarily from interchange fees collected when users swipe their debit cards.

"We're just scratching the surface on this enormous business opportunity we have today," Chime CEO Chris Britt told Reuters in an interview.

Britt noted that Chime only serves less than 5% of the 200 million Americans who earn $100,000 or less a year, a slice of the market that the company has heavily targeted by spending nearly $520 million in 2024 on marketing.

"Our goal is to be the number one market share company in terms of primary accounts, recurring direct deposit accounts in that segment, and we're not going to stop there," Britt said.

Morgan Stanley, Goldman Sachs and J.P. Morgan were the lead underwriters for Chime's IPO.

MARKET THAW DRAWS IPO HOPEFULS

Soaring interest rates and recession fears since the 2021 IPO boom have hit valuations and investor demand for new issues, forcing many private companies to delay their IPO plans. But some high-growth firms are cautiously testing the waters again.

Circle CRCL.N, the stablecoin issuer that went public last week, has seen its stock gain fourfold from its IPO price. Space tech firm Voyager's VOYG.N shares more than doubled on their debut on Wednesday.

However, some analysts cautioned against excessive optimism, warning that uncertainty around trade negotiations by President Donald Trump's administration could weigh on the broader recovery.

"While this is clearly a strong IPO window now, there is no guarantee it will continue," said Samuel Kerr, head of equity capital markets at Mergermarket.

"Investors and issuers have made use of the tariff pause to do deals but there is still broad uncertainty."

Crypto exchange Gemini, buy-now-pay-later firm Klarna, AI chipmaker Cerebras and medical supplies company Medline are among the most closely watched names in the current IPO pipeline.