For Chime, the listing wasn’t super successful
Fintech company Chime went public on the Nasdaq stock exchange. However, the IPO did not live up to the company’s expectations. The startup’s valuation ended up being 57% lower than its peak. On the first day of trading, the stock price was over US$37 per share. This figure was 37% higher than the price set during the listing.
Although Chime’s IPO was an anticipated event for the sector, it did not produce the expected results. Investors are cautious and are not rushing to invest, even in promising areas.
Listing features
Ryan Zauk of OMERS Ventures says that the current situation is a natural normalization after a period of market overload. The terms of Chime’s IPO were as follows:
– the company set the price at US$27 per share;
– the market capitalization was US$11.6 billion, taking into account the full dilution of shares;
– the discount was 54% of the business’s peak valuation in 2021, which was US$25 billion;
– the initial target price was in the range of US$24–$26 per share.
Chime’s last round of financing took place in 2021. Sequoia and SoftBank became investors then and also participated in the current IPO. They purchased shares at a price close to the 2021 valuation. Other investors, such as Crosslink Capital, Cathay Innovation, and Menlo Ventures, had supported the company earlier. They expect to make significant profits if the current share price is maintained.
Expected returns for investors
Chime entered the market at an unfavorable time, which is why it received investments at a lower valuation than expected. After a period of rapid growth and substantial investment in the sector, the market is gradually stabilizing. Venture capitalists must adapt to these new conditions.
Menlo became Chime’s main investor during its Series C funding round. This round took place in 2018, when the startup raised US$70 million. Menlo’s stake is currently valued at approximately US$470 million. The company has no plans to sell its Chime shares.
Cathay led the Series B round in 2017, investing US$18 million. Today, the company’s stake is worth about US$413 million. Crosslink Capital, which invested US$8 million in Chime in 2014, is likely to receive the highest return. During this period, the value of the investment has grown to US$789 million.
