Revenues in 2018-2020
Invest in Chime
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Chime is the largest digital bank in the US. Chime Bank is also a branch-less mobile bank that allows
users to access its services through an app. Customer’s Chime spending account and savings account
come with a free Visa debit card. With the Chime mobile application, you can control your savings,
account balances and transactions, instantly transfer money to your friends, deposit paper checks by
photo and much more.
Unlike traditional bank accounts, there are no monthly account fees and minimum balance requirements, overdraft is fee-free. Chime doesn’t profit off of customers. Every time a customer uses his Chime debit card, Chime earns a small amount from Visa paid by the merchant.
Nearly 2 billion people in the world don’t have access to banking services. Digital banks represent a
powerful tool for advancing financial inclusion, helping more and more people to manage their money
effectively. According to Pitchbook, by the end of 2020 digital banks will be serving 60 million
people across North America and Europe. By 2024, the number of customers choosing digital banking
products will exceed 145 million.
In 2018, the global digital banking market was valued at $804 billion and is expected to reach $1.6 trillion by 2027, growing at a CAGR of 9%. In 2019, the digital banking market in North America was valued at $376 billion and is predicted to reach $721 billion by 2027, growing at a CAGR of 8.3%.
Long-term activity risk. Chime is a leading digital bank, but it faces intense competition in the
market. Chime's top competitors include SoFi, Moven, Varo Money, Cash App. Also, companies from other
segments may foray into the digital banking market. Apple has launched its new iPhone-integrated
credit card, registering 3 million credit cards within the first year.
Overestimated market valuation. Digital banking is relatively young, there is a risk that analysts and venture investors are overestimating the industry’s growth potential. Chime hasn’t disclosed its financial statements. It is unclear if it shows any tendency toward profitability.
In 2019, Chime reached nearly $200 million in revenue, a fourfold increase over 2018, according to
Forbes ($300 million according to CNBC). Chime CEO Chris Britt said that the company has more than
tripled its transaction volume and revenue this year and has become profitable on an EBITDA basis.
Chime is expected to reach $1.5 billion in revenue in 2021.
In September 2019 Chime Bank served 5 million customers, in February 2020 — 8 million. Given Chime's capitalization growth and its CEO's statement about revenue growth, we assume that the company has about 15 million customers.
Investors: Yuri Milner's DST Global, Tiger, ICONIQ, General Atlantic, Dragoneer and hedge funds investing in public and private firms. Major public funds believe in Chime, which suggests that it’s close to IPO. According to Chime’s CEO, Chime will be ready for IPO within the next 12 months.
Similar companies: Square (SQ) and PayPal (PYPL). Square’s capitalization is $78 billion, P/S = 13x, revenue grows by 64%. PayPal has a $225 billion market capitalization, P/S = 12x, revenue grows by 22%. Given Chime’s growth indicators, its value may reach $30 billion after the company goes public. Expected return on investment — 85%.
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Invest in Chime
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