Chime Is Planning to IPO at an $11.2 Billion Valuation. 3 Things Investors Need to Know -- Is the Stock a Buy?

After years of anticipation, Chime is planning to go public at an $11.2 billion valuation in an offering that will attempt to raise $832 million of capital. Chime, which will list on the Nasdaq Stock Exchange under the ticker "CHYM," will issue as many as 32 million shares at an initial price that is expected to be between $24 and $26 per share, although things could change after management does its "road show," during which it will pitch itself to potential investors to try and drum up excitement.

Chime has positioned itself as a more accessible bank for Americans earning up to $100,000. While the once-lofty valuations of many fintech companies have come down considerably the last couple of years, the promise of deregulation under the Trump administration could provide some tailwinds for the sector. Here are three things investors should know about Chime and whether the stock is a buy.

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1. Amassing millions of 'everyday' Americans as customers

While the terms "unbanked" and "under-banked" are interestingly not mentioned in the company's registration statement, Chime rose to prominence by catering to Americans in those categories. Unbanked refers to people who do not use a bank or financial institution. Underbanked refers to people who may have traditional banking accounts, but who also often end up using less-mainstream options such as check-cashing services and payday lenders, which charge considerably more for their services than traditional financial institutions.

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Chime tried to change the game for these underserved populations by offering low-cost bank accounts, early access to direct-deposit money, fee-free overdraft protection up to $200, secured credit cards with no annual fees, late fees, or interest on missed payments, and other savings and perks. Getting people who are underserved by traditional banks into such products helps them improve their credit scores as well. Chime has partnered with several banks with federal deposit insurance coverage to undergird its operation. All of its products are bundled into a sleek tech platform and a powerful app, where applicants can sign up easily online, access more than 45,000 ATMs with no fees, and take advantage of other customizable features to better manage their finances.

Its offerings have proved compelling. Chime now has 8.6 million active members, defined as people who have initiated one transaction to move money on Chime in the past calendar month. Management also reported that 67% of its active members use Chime as their primary banking relationship, which it defines as making at least 15 purchases with their Chime-branded debit or credit cards in the past calendar month, or who had at least one qualifying direct deposit of $200 or more in the past calendar month.

2. Close to profitability

Since 2022, Chime's annual revenue has significantly increased and is now starting to sniff profitability. In 2024, it generated $1.67 billion in revenue and booked a roughly $25.3 million net loss. Revenue increased nearly 31% year over year, while its losses narrowed The company generated profit in the first quarters of both 2024 and 2025. The first quarter is believed to be the best seasonal period for Chime.

Chime is different from a traditional bank in that interest-rate spread revenue from lending is not a key component of its business. Rather, the majority of revenue comes from the interchange fees it earns when customers use their debit and credit cards. This is more efficient from a capital perspective, but it requires a lot of volume for the model to work profitably. Payments revenue in 2024 made up 76% of total revenue; the remainder came from platform-related revenue, which consists of fees on ATMs used outside of the company's network, fees for providing liquidity in advance, fees on deposits net of interest paid to members, and third-party affiliate revenue.

One thing investors might not be so crazy about is the amount of money Chime has been spending on marketing: Its sales and marketing outlay was close to $520 million in 2024. However, management said that it estimates the average yearly cost to serve a retail deposit customer at one of the three largest banks in the U.S. is three times higher than Chime's cost, and for mid-sized and regional banks, it's five times higher.

3. How Chime plans to grow

With most of its revenue coming from interchange fees, one key way that Chime can grow is by adding new members and increasing the payment volume on its various branded cards.

Looking at the number of people in the U.S. who earn less than $100,000 a year and multiplying that by its current average revenue per active member, Chime estimates that its serviceable addressable market is worth $86 billion. By rolling out new products to meet the financial needs of its target customers, Chime thinks it can increase that to $312 billion.

Chime also says it plans to stick with its asset-light model, which likely means that it doesn't plan to expand too much into the lending arena. Interestingly, the company has developed a proprietary cloud-native payment processor and ledger called ChimeCore to process some of its payments, transfers, deposits, withdrawals, and other financial transactions. This in-house system will allow Chime to spend less on legacy system maintenance and more on product innovation. It also gives the company more autonomy and the ability to roll out new products more quickly than if it outsourced payment processing.

Is the stock a buy?

There is a lot that impresses me about Chime, starting with the number of active members who use it as their primary bank. Its technological capabilities are another big plus, especially when you think about ChimeCore, which is certainly ahead of what many traditional banks are doing. It has also increased revenue rapidly and seems to be on the brink of profitability.

Some of the drawbacks I see are the high level of marketing spending and its reliance on lower-cost customers. While Chime has done a good job of serving this segment and innovating, it's hard to make a lot of money from this group, especially without lending.

That leads me to my next question: Where does Chime go next? Sure, it has a strong brand and has increased its membership rapidly, but how does it continue to stand out? For instance, Chime was one of the first to offer advanced access to funds from pending paychecks, but now, most banks do it. Interchange revenue is good in that it's capital-efficient, but the downside is it relies on continued growth and can take a hit if consumer spending declines, which it would in a recession.

The $11 billion valuation the company is seeking feels a bit rich right now. But the stock could become compelling if its valuation declines a bit, if Chime's cost to acquire members falls, or if the bank introduces interesting new products that could materially drive revenue higher.

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