Where Will Chime Financial Stock Be in 1 Year?

Key Points

• Chime went public three months ago, but it now trades below its IPO price.

• Its slowing growth in the second quarter spooked the bulls.

• However, its core business is healthy, and its stock looks reasonably valued.

• 10 stocks we like better than Chime Financial ›

Chime Financial (NASDAQ: CHYM), a fintech company that provides mobile banking services, went public at $27 on June 12. The bulls initially rushed to the stock, which opened at $43 on the first day, but it now trades below its initial public offering (IPO) price at about $24.

Will Chime's stock rise back above its IPO price and hit new highs during the next year? Let's review its business model, growth rates, and valuations to find out.

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Image source: Getty Images.

How does Chime make money?

Chime provides fee-free checking and savings accounts with overdraft protection, early pay features, and other financial services. It also offers a Visa debit card, with fee-free access to more than 50,000 ATMs across the country, as well as an entry-level Visa credit card.

Chime targets lower-income users who don't have enough assets to open higher-value, fee-free accounts at traditional banks. Its early pay tools are useful for its users who live paycheck to paycheck, while its Visa credit card helps them gradually build up their credit scores.

Chime isn't a bank. It tethers its users to two banks -- the Bancorp Bank and Stride Bank -- which actually hold and manage customers deposits, which are protected by the Federal Deposit Insurance Corporation. It generates most of its revenue by taking a cut of the swipe fees that Visa charges merchants whenever its debit and credit cards are used, while a smaller percentage comes from incentives paid by its banking partners for bringing in more accounts.

How fast has Chime been growing?

Chime's number of active members, total purchase volume, and average revenue per active member (ARPAM) all grew during the past 2 1/2 years.

Data source: Chime Financial. YOY = Year over year.

In the second quarter of 2025, its purchase volume and ARPAM declined sequentially, while its sequential growth in active members also slowed. But that deceleration was mainly seasonal, since tax refunds generally drive higher signups and spending in the first quarters of every year.

What are Chime's near-term challenges?

Chime's year-over-year revenue growth still accelerated in the second quarter of 2025 as its growth in active members offset its sequential drop in purchase volumes and ARPAM. However, its gross and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margins all declined sequentially, as it squeezed out less revenues per member, ramped up its marketing campaigns, and expanded its ecosystem with new lower-margin services.

On a generally accepted accounting principles (GAAP) basis, its net loss also widened to $923 million in the second quarter of 2025, as it allocated a whopping $928 million to its post-IPO stock-based compensation expenses.

Data source: Chime Financial. YOY = Year over year.

For the third quarter, Chime expects its revenue to rise between 24% and 27% year over year, with an adjusted EBITDA margin of 2% to 3%. For the full year, it expects its revenue to grow 28% to 29%, with an adjusted EBITDA margin of 4%.

That outlook is bright, but it probably disappointed the investors who were expecting a significant acceleration. From 2025 to 2027, analysts still expect its revenue and adjusted EBITDA to grow at a CAGR of 20% and 124%, respectively. With a market cap of $9.1 billion, it looks reasonably valued at a little more than 4 times this year's sales.

So where will Chime's stock be in a year?

If Chime matches analysts' estimates and still trades at 4 times its current year's sales, its stock could rise 14% to $28 within the next 12 months. That might not satisfy its growth-oriented investors, but it could have plenty of upside potential during the next few years if it expands its ecosystem and attracts more lower-income users.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Visa. The Motley Fool has a disclosure policy.