Fintech, mobile platforms and enhanced cybersecurity means neobanks are booming. Neobanks offer financial services exclusively online and bypass the need for physical banks.
Chime is a neobank that offers lower costs, higher-yielding savings accounts and a convenient mobile app. Take a look at the interest in the Chime initial public offering (IPO) and learn how to buy Chime IPO stock now.
When is the Chime IPO Date?
If you’re looking for a specific date on the IPO calendar for Chime’s public market debut, you may have to wait a while. The firm is targeting a March 2022 IPO date.
In the company’s last funding round, it raised $485 million. This values the company at $14.5 billion, making Chime among the most valuable U.S. consumer fintechs.
Chime Financial History
At time of writing, Chime had yet to file its Form S-1 with the Securities and Exchange Commission (SEC). Without this document, it’s difficult to analyze the specifics of Chime’s fiscal performance.
However, many institutional investors started backing pre-IPO companies with greater emphasis, largely due to the public markets becoming very frothy. Plus, with popular speculative trades like cryptocurrencies recently experiencing severe volatility, it’s likely that institutional players will continue supporting IPO-ambitious firms with relevant businesses and technologies.
Chime is a standout in the private equity funding space. Since August 2013, the fintech firm raised over $1.5 billion. Over the years, lead investors include DST Global, Menlo Ventures, Cathay Innovation, Aspect Ventures and Crosslink Capital.
Because of the deep institutional interest in Chime, management has options regarding how it wants to go public. Of course, it can choose the traditional approach or directly list its shares. And Chime can become a reverse-merger target via a special purpose acquisition company (SPAC).
Chime Potential
Despite being thin on financial details, the Chime IPO has significant upside potential. The company enjoys a unicorn valuation from major backers. That’s not a small fact to ignore, especially in this crazed market environment where seemingly everything has skyrocketed in value.
Fears regarding COVID-19 and its various mutations may continue to incentivize fintech platforms and contactless services. According to the latest information by the Centers for Disease Control and Prevention (CDC), 89.2 million Americans have been fully vaccinated. That’s about 27% of the U.S. population, which still leaves many not inoculated. For safety reasons, neobanks could benefit from rising demand.
Well before the pandemic, millennials in big cities ditched cash for credit cards, alternative payment solutions and mobile apps. Since this demographic represents the largest group in the U.S. labor force, millennial trends will have a huge impact on the consumer economy.
How to Buy Chime IPO Stock
Because the Chime IPO is likely further down the road, retail investors may have 2 viable options. First, if Chime elects to proceed via a traditional IPO, you can try to acquire shares at their initial offering price through platforms that allow everyday private investors to buy pre-IPO stocks.
Second, you can choose to wait until Chime releases its shares to the public. Although this puts you at a disadvantage due to the likely IPO pop, you won’t have to worry about holding up your funds in a pre-IPO investment.
Remember, just because a startup is about to go public doesn’t necessarily mean it will be successful. The WeWork disaster offers a cautionary tale.
Plus, if you decide to take the latter approach, the process is straightforward. If you know how to buy stocks, you’re already ahead of the game. If not, follow the below steps.
- Pick a brokerage.
Before you can do anything in the stock market, you must first pick a brokerage. Decades ago, brokers’ pricing for their services varied considerably.
Today, the introduction of mobile investment apps forced brokers to offer much more competitive pricing. Essentially, almost every broker offers the same incentives, such as commission-free trading.
What this means for you is that you can now choose a brokerage that best fits your needs and ambitions. If you’re constantly on-the-go, a mobile app may give you everything you want. But if you’d like to build your investing acumen, you should consider robust, full-service platforms.
Below is a list of best brokers to consider. - Decide how many shares you want.
Your share count determines your profitability potential and thus your risk exposure. Obviously, the more shares you own of the Chime IPO, the more money you will make should the stock rise in value. However, the opposite is also true if Chime’s public market debut fails. Thus, you should save your biggest acquisitions for your highest-conviction opportunities.
Whatever share count you decide, make sure to write this down ahead of time. It’s almost always better to conduct trades based on well-reasoned strategies, not emotions. - Choose your order type.
Due to constantly changing prices, you need to use specific order types to conduct your trades. Below is a list of important information to understand before you place your 1st order.
Bid: The bid is the highest price a buyer will offer for a stock. It is always lower than the ask.
Ask: In contrast, the ask is the lowest price that a seller will accept. It is always higher than the bid.
Spread: The spread (or sometimes called bid-ask spread) is the difference between the bid and ask price. It’s also the de-facto indicator of market liquidity and risk. Narrower spreads indicate greater liquidity and therefore lower risk. That’s because you can likely find a buyer for your stock when you decide to sell. Wider spreads indicate lower liquidity and higher risk.
Limit order: Use a limit order to buy stock at a specific price. Be aware that no guarantee exists that the stock will reach said price. Therefore, you can possibly leave your limit order hanging unfulfilled.
Market order: If you want to buy shares at the going rate, choose a market order. This automatically fulfills your request at the next available price. Keep in mind that buy orders will execute at the ask and sells orders on the bid.
Stop-loss order: Use stop-loss orders to protect your holding against volatility. This order type automatically exits you out of your position at either a predetermined price or the next available price, whichever comes first. The biggest risk here is the gap-down session, where a stock opens much lower than the prior session’s close.
Stop-limit order: Stop-limit orders exit you only at a predetermined price. However, if following a gap-down session your target stock never reaches the predetermined price, you would have been better off placing a stop-loss order instead. - Execute your trade.
To execute your trade, follow these steps for a market order:
Select action type (buy or sell).
Enter the shares you want to acquire (or sell).
Hit the buy (or sell) button.
For limit orders, follow the same steps above, with the exception that you must also enter your desired execution price.
Where to Buy Chime Stock on the Open
- Best For:Active and Global TradersVIEW PROS & CONS:Securely through Interactive Brokers’ website
- Best For:Experienced TradersVIEW PROS & CONS:securely through Freedom Finance's website
Try Equitybee
Equitybee is an online investing platform that allows accredited investors to access startups by helping fund employee stock options. Often, employees at pre-IPO companies don’t have the funds to exercise those stock options, but Equitybee helps on both sides of the process. It works like this:
- The investor wires the initial investment amount plus the 5% fee
- As mentioned, the employee agrees to pay 30% of the future value of the shares and x% in annual interest to the investors
- The company takes an undetermined amount of time (let’s say 3 years) from the time the investor funds the options to the time it IPOs at [whatever the IPO price is]
- After a successful IPO, the employee receives the proceeds of the stock option [the number of shares multiplied by the stock price.] As a result of their funding agreement, the employee wires the investor their original investment amount plus 3 years of interest. Additionally, the employee has agreed to pay 30% of the total they earned from the IPO.
- After the employee wires 30% of the total proceeds and interest to the investor, the investor pays a 5% fee to Equitybee
- Keep in mind that this is a taxable event for the employee and the investor. It’s wise to consult with a tax professional to seek further assistance.
With a system like this, investors can access pre-IPO companies and gauge their performance without making a huge bet on the day of the IPO.
Chime Restrictions for Retail Investors
Before you participate in the Chime IPO, you should review the Financial Industry Regulatory Authority (FINRA) guidance on restricted persons. These individuals cannot participate in IPOs mainly because of their status as insiders.
Chime Pre-IPO
Historically, only institutional investors and well-connected private investors enjoyed access to pre-IPO shares. Underwriters offered a discount to what the market might bear for the IPO stock to reward early stakeholders. However, platforms like ClickIPO now allow regular retail investors to participate in select pre-IPO shares.
Because Chime has not yet filed for its debut, it’s equity unit is unavailable on ClickIPO. But you should watch this space as the story develops.
Banking Solutions for the Next Generation
Chime not only offers a business with a unicorn valuation, it represents the evolution in consumer behaviors. Millennials and Generation Z grew up with digital technologies, so the concept of neobanks comes naturally to them. And fears associated with the pandemic may bring multiple generations to Chime’s contactless platform.
Dig into Chime’s potential, and decide if you are ready to invest in the Chime IPO next year.
About Joshua Enomoto
His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.