Amid renewed excitement in the U.S. IPO market following stablecoin issuer Circle's listing, another high-profile debut arrives today—financial technology firm Chime, which focuses on serving low- and middle-income consumers.

According to updated IPO filings, Chime is set to list on the Nasdaq at $27 per share, above its initial price range of $24 to $26. The company will issue nearly 26 million shares, raising close to $700 million, while existing investors will offload over 6 million shares.

At the IPO price, Chime's market valuation stands at approximately $9.8 billion. When accounting for employee stock options and restricted shares, its fully diluted valuation slightly exceeds $11 billion.

This figure is particularly noteworthy as the tech investment community grapples with steep valuation markdowns for pandemic-era darlings. Chime was once valued at $25 billion during its 2021 funding round.

Chime's core business offers no-fee "banking" services, though it does not hold a banking license itself. Instead, it partners with licensed banks to provide fee-free financial accounts and early wage access. Most of its revenue comes from interchange fees-charges paid by merchants when customers use Chime-branded debit or credit cards.

Financial disclosures show Q1 2024 revenue reached $518 million, with net income at $12.93 million. Over the past three fiscal years, losses narrowed from $470 million to $20.3 million and then to $2.534 million.

Chime's rise is tied to U.S. banking reforms. The 2010 Dodd-Frank Act's Durbin Amendment capped debit card interchange fees—but only for banks with over $10 billion in assets. Major banks shifted resources toward credit cards (unaffected by the rule) and imposed monthly fees (e.g., $5) on debit accounts to offset lost revenue.

Traditional banks find serving lower-income customers via debit interchange fees unattractive compared to credit cards' 10%-20% interest rates. This left a gap for Chime to serve "Americans left behind by banks."

As of March 31, Chime had 8.6 million active users, processing $121 billion in annualized transactions. Its average member is 36.2 years old, with 55% being female.

A Bellwether for IPO Market Recovery

Chime's listing also serves as a litmus test for the IPO market's revival. After the Fed's aggressive rate hikes triggered a valuation reset, many late-stage tech firms have hesitated at the listing threshold. But recent hot debuts—like eToro's 30% first-day pop and Circle's near-4x surge—have reignited optimism.

This Tuesday, space station developer Voyager Space soared 82% at its debut. Buoyed by demand, these IPOs expanded share offerings and priced above initial ranges.

The frenzy has spurred more companies to accelerate listings. Crypto exchange Bullish (backed by Peter Thiel) and Gemini have confidentially filed for IPOs, though their timelines remain unclear.