Latest news with #Chime
Forbes
12 hours ago
- Business
- Forbes
Is SOFI Stock A Buy After Its 15% Rally?
SoFi stock (NASDAQ: SOFI) has seen a significant increase of over 15% in the past month. This surge appears to be partly fueled by the successful IPO of Chime, which seems to have had a positive ripple effect across the broader fintech sector. After a multi-year freeze in public offerings, fintech companies like Chime are finally entering the market, albeit with more modest valuations and tempered expectations. See – Strong Growth, Improving Earnings Make Chime Stock A Buy? However, despite this recent rise, SoFi's stock, currently trading around $15, no longer appears attractive. We have a couple of key concerns that make its current valuation seem excessively high. Our conclusion is based on a comprehensive analysis comparing SoFi's current valuation with its recent operating performance and its historical and current financial health. We've evaluated SoFi Technologies across critical parameters including Growth, Profitability, Financial Stability, and Downturn Resilience. Our findings indicate that the company has only a moderate operating performance and financial condition. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative - having outperformed the S&P 500 and generated returns exceeding 91% since its inception. On a separate note, see Archer Aviation: What's Happening With ACHR Stock? Going by what you pay per dollar of sales or profit, SOFI stock looks expensive compared to the broader market. SoFi Technologies' Revenues have grown considerably over recent years. SoFi Technologies' profit margins are much worse than most companies in the Trefis coverage universe. SoFi Technologies' balance sheet looks strong. SOFI stock has fared much worse than the benchmark S&P 500 index during some of the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes. In summary, SoFi Technologies' performance across the parameters detailed above is as follows: SoFi's performance across the analyzed parameters has been neutral. Considering its high valuation compared to the benchmark index, we believe the stock is currently unattractive. In fact, SoFi's own average price-to-sales (P/S) ratio over the last three years was 4.5 times, significantly lower than the current 5.9 times. While we acknowledge that the success of Chime's IPO and SoFi's expanding customer base might lead some investors to assign higher valuation multiples, it's crucial to consider the inherent risks. These include elevated interest rates and geopolitical tensions, both of which could impact the broader markets. Furthermore, SoFi has shown relatively less resilience to such adverse economic conditions. For investors seeking to mitigate these risks, our Trefis High Quality (HQ) Portfolio offers a compelling alternative. It applies a robust risk assessment framework to its collection of 30 stocks, which has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
Forbes
13 hours ago
- Business
- Forbes
Buy, Sell Or Hold Chime Stock?
NEW YORK, NEW YORK - JUNE 12: CEO of Chime, Chris Britt, center right, rings the opening bell during ... More the company's initial public offering at the Nasdaq MarketSite on June 12, 2025 in New York City. Chime offers on-line banking and digital financial services. (Photo by) Chime Financial (NASDAQ: CHYM), a fintech company, made its market debut last week. Although the stock initially soared nearly 40% above its IPO price of $27, opening at $43, prices have since declined, with the stock currently trading just below $35. While post-IPO fluctuations are common, what does the investment outlook for Chime look like? Chime is a neobank, which is primarily a digital-first banking firm that operates without brick-and-mortar locations. Chime specializes in providing affordable financial services through modern, mobile-first platforms. This strategy has resonated with younger users and underserved groups, especially those deterred by the high fees and requirements of traditional banks. Chime implements a no-fee structure, allows early access to direct deposits, and offers a streamlined app experience, setting itself apart from many conventional banks. Some of the company's well-received services include "MyPay," which enables customers to access as much as $500 of their paycheck early, while the "SpotMe" service offers no-fee overdraft protections. Chime asserts that it serves a predominantly underserved audience, estimating that it currently reaches under 5% of the approximately 200 million Americans earning less than $100,000 annually. This presents a substantial opportunity for expansion. Fintech company Circle, which operates in the stablecoin sector, also went public recently. Can Circle Stock Top $300? Chime operates on a relatively straightforward business model. It derives most of its revenue from interchange fees, which are the minor costs merchants incur whenever a customer uses their Chime debit or credit card. Furthermore, unlike some competitors such as SoFi, Chime does not function as a bank itself. Instead, it collaborates with established banks to manage the backend banking tasks. This arrangement allows the company to assume little to no credit risk, which is advantageous since it serves less wealthy clients. This model also enables Chime to secure higher interchange fees compared to traditional banks, which face regulatory limits. Chime's financial performance has also been on the rise. Revenue increased by over 30% in 2024 and surged by 32% in the first quarter of 2025. The company's profitability is showing signs of improvement as well. Although net losses reached $25 million last year, they decreased in comparison to 2023. Chime was even profitable in the first quarter of 2025. This change suggests that Chime's substantial investments in marketing and brand development are yielding positive results. For context, Chime allocated over $500 million for marketing efforts in 2024 alone. However, challenges remain. The neobanking landscape is becoming increasingly commoditized, with minimal differentiation among digital offerings. While Chime has built brand recognition through focused marketing and its early advantage in the market, fostering customer loyalty in banking is challenging, and maintaining it is equally difficult. Traditional banks are also progressively creating comprehensive digital platforms that bundle various financial services, thus reducing friction in banking processes. Many consumers, particularly older or more affluent individuals, will be hesitant to shift their business away from established institutions like JPMorgan Chase or Wells Fargo. In terms of valuation, Chime's current share price of about $34.50 suggests a market capitalization of roughly $12 billion, translating to a trading ratio of about 7x trailing revenues – which is not particularly cheap. However, the company's enhanced profitability and consistent growth may justify this valuation to some degree. Chime's dependence on transaction fees also presents a risk, as any economic downturn could result in reduced spending activity. Unlike traditional banks that benefit from more stable revenue streams such as deposits or wealth management fees, Chime is heavily reliant on user growth and transaction activity. Investing in a single stock like CHYM carries risks. Conversely, the Trefis High Quality (HQ) Portfolio, comprising 30 stocks, has consistently outperformed the S&P 500 by a comfortable margin over the past four years. What's the reason for that? Collectively, HQ Portfolio stocks have generated higher returns with lower risk compared to the benchmark index, offering a less volatile investment experience, as illustrated by HQ Portfolio performance metrics.
Yahoo
2 days ago
- Business
- Yahoo
Sixth Street-backed Caris Life valued at $7.66 billion in strong Nasdaq debut
(Reuters) -Caris Life Sciences' shares jumped nearly 29% in their New York debut on Wednesday, fetching the cancer diagnostic firm a valuation of $7.66 billion and signaling a growing investor appetite for new listings in 2025. The shares opened at $27 apiece, compared with their offer price of $21, at which Caris Life sold 23.5 million shares to raise $494.1 million on Tuesday. U.S. IPO market activity has shown signs of a sustained revival with a few fresh listings such as Circle and Chime getting overwhelming support from investors in the past couple of weeks, after a slow start to the year. Shares of insurance tech firm Slide jumped nearly 24% in their Nasdaq debut on Wednesday as well.
Reuters
3 days ago
- Business
- Reuters
Breakingviews - Dizzying IPO pops benefit from small class size
NEW YORK, June 17 (Reuters Breakingviews) - A recent triple-C run of public-market debuts has won an A grade from investors. Alliterative initial public offerings from CoreWeave (CRWV.O), opens new tab, Circle Internet Group (CRCL.N), opens new tab and Chime Financial (CHYM.O), opens new tab all led to stunning share-price gains. It's a glimmer of hope after a long downturn in new listings. Yet only $12 billion has been raised in first-time offerings this year, down even from the $14 billion raised in 2024's uninspiring first six months. With so few deals, over-eager investors may well be grading on a curve. When there are few new stock-exchange entrants, especially those involved in the hottest trends of the day, it should be easy to catch the attention of investors with the inclination – or a mandate – to hop in on debuts. Indeed, there are signs that such shiny-object syndrome has taken hold. Take Chime, a rising competitor in the buzzing financial technology space. Following its IPO, shares rose 37% above their offering price. On the same day, the on-trend debutantes that preceded it – cryptocurrency issuer Circle and space defense firm Voyager Technologies (VOYG.N), opens new tab – fell 10% and 19%, respectively. In sum, they lost $3.1 billion in value as Chime gained $3.6 billion, on a day when the overall market was up. Circle saw a similar phenomenon, rising nearly 170% on its first trading day, or $11.6 billion. At the same time, CoreWeave, which provides computing power for artificial intelligence giants, saw its value fall $10 billion. There are plenty of reasons why money might chase around, from hedge funds who angle to quickly flip early stakes through to retail investors eager to hop aboard the latest rocket-ship. With new IPOs running at such a meager pace, these momentum-chasers have few names on which to focus. To be fair, all of these stocks remain strongly above their offering prices, and the companies behind them offer decent stories tied to big themes. Circle should benefit from new legislation and a more crypto-friendly White House. CoreWeave taps into AI's vast hunger for computing power. Yet the ebullience seems out of whack with their financial results. At $150, Circle's shares now trade at over 190 times last year's earnings. The question remains whether the companies lining up behind this group - like crypto firms Gemini and Bullish, or Blackstone-owned Spanish casino operator Cirsa Enterprises – will be as lucky. As class sizes expand, investors can be pickier. The likelihood is that, in future, only star students will stand out. Follow Stephen Gandel on LinkedIn, opens new tab and X, opens new tab.
CNBC
3 days ago
- Business
- CNBC
IPOs are the hot trade right now. Here's the outlook for the second half
High-profile initial public offerings in recent weeks have left investors wondering if the new issues market has woken up from a years-long slumber. Several companies that went public in the second quarter outperformed. Stablecoin issuer Circle priced its IPO above the expected range this month and went on to more than double in its first trading day. Online banking stock Chime soared in its Nasdaq debut after also pricing above the range that underwriters had marketed. Stock brokerage eToro rallied almost 29% after pricing above the expected range when making its IPO in May. The same month Hinge Health climbed 17% in its first trading day, giving the health technology company a market value above $3 billion. "We're in a really good position right now in U.S. markets," said Avery Marquez, director of investment strategies at Renaissance Capital, which provides pre-IPO research and IPO-centered ETFs. "There's a lot of momentum right now" heading into the second half. Now, the revival in the IPO market is lifting sentiment toward companies waiting on the sidelines, although opinion is mixed as to whether the recent strength can continue at the same pace. The U.S. IPO market has so far seen 150 deals in 2025 that raised nearly $27 billion in 2025, the most since 2021, according to Dealogic, a firm that tracks capital markets activity. Beating low expectations Such explains the surge in the Renaissance IPO ETF (IPO) , which invests in companies that have just gone public. The exchange traded fund has surged more than 17% this quarter, more than double the 7.5% gain in the S & P 500 in the same period. IPO .SPX 3M mountain Renaissance IPO ETF vs. S & P 500, 3-month The IPO rebound is a reversal from where investors expected the market to be at this point, said Renaissance's Marquez. The unveiling of President Donald Trump's tariff policy introduced uncertainty into the market and hampered returns, leaving traders worried that the pipeline would slow, she said. Some companies that had thought they'd go public instead delayed their IPOs as the stock market plunged in reaction to Trump's trade policies. The new issue market's performance in May and June beat low expectations, Marquez said, fueled by broader market's rally after President Trump paused his high tariff plan. With the 90-day pause expiring in early July, investors may be in a better position to absorb such shocks in the future, knowing that some U.S. trading partners have struck deals, or the outline of deals, to avoid the full impact of proposed duties, Marquez said A 'clogging situation' To be sure, the IPO market is still constrained by tighter financial conditions as a result of the Federal Reserve's tightening cycle since 2022, according to Peter Boockvar, chief investment officer at Bleakley Financial Group. Many companies are reluctant to go public now because they assume they'll get a lower valuation than would have been the case when interest rates were lower. Higher rates have also made investors more focused on current profits or the path to profitability, adopting a "show-me-the-money" mentality when it comes to evaluating companies that could IPO. "There's a clogging situation where not that many [potential candidates] are going public," Boockvar said. "There are tens of thousands of businesses that are on private equity and venture capital balance sheets that ... don't necessarily have an exit strategy that they hoped for," the CIO said. "It clogs up the entire financing network if you don't have a vibrant and robust and active IPO market." Even after four years, the U.S. IPO market is still recovering from the bull market of 2021, when interest rates were near zero. That year, more than 1,000 U.S. companies went public, raising a combined $315 billion. The year before, almost 500 companies raised $168 billion. Indeed, while Renaissance's ETF has recently outperformed, the fund is still more than 30% off its all-time high from 2021. That also helps explain why the U.S. appears to be losing its grip on the IPO market. Dealogic data shows U.S. IPOs accounted for 48% of global capital raised by new issues so far in 2025, down from 58% in the same period of 2021. Individual stocks tied to the recent IPO resurgence have also faced questions. Bank of America this week downgraded CoreWeave , which went public in March, to neutral from buy. The majority of analysts have hold-equivalent ratings on the stock and expect the share price to pull back, based on the consensus 12-month price target, per LSEG. Bank of America cited the huge runup since the seller of artificial intelligence technology in the cloud priced its IPO. At the time, CoreWeave's $1.5 billion IPO marked the largest technology offering to date on Wall Street since 2021. Public vs. private pipeline Renaissance's Marquez said there is a slim pipeline of companies that have publicly filed to go public, and are waiting for their holding period to expire. But she said there's a "ton" of movement in the private pipeline, comprised of companies that have said in news stories they have filed confidentially or are working with banks on an IPO plan. Because of the strength in the private pipeline, Marquez said investors can expect a more normalized fall calendar for IPOs. "Sometimes, investors get stuck looking at what's right in front of them ... looking at that public pipeline," Marquez said. "But investors need to kind of take a step back and ... look at these names that are still in the news, still making headlines as making progress towards an IPO, but not necessarily right in that public pipeline."
