Will it be a long goodbye or a deferred hello?

The trade war changed a lot of things in the fintech ecosystem, but potentially none more jarringly than the prospects for IPO for major companies like Circle, Klarna and Chime. A few weeks ago I made the claim that Chime's IPO would be delayed, but not necessarily halted and that if the stock market improved there would be a chance that Chime could still file the S1 by the end of the month with a target IPO before mid May 2025 (see original view at end of the post). This is no longer possible.

My predictions at the time (one day after "Tariff Day") were:

1. America will pull back and renegotiate tariffs (correct)

2. Stock market will rebound (correct)

3. It would be in Chime's interest to file S1 with 2024 financials so they could report a mega Q1-25 on the back of tax refunds season (correct)

4. It would in Chime's best interest to file S1 in near-term so their first reported quarter would be larger than any S1 filed report, avoiding 2+ quarter delay (mostly correct)

So if all of those predictions were correct, why didn't Chime file their S1? What I now think I didn't get fully correct was exactly how (4) would play out. I still think that Chime is delaying their IPO not halting it, and there's a good chance that it's only 1 quarter.

Here's why:

A. The gutting of the IRS significantly delayed tax refund timing, so a portion of tax refunds normally spent in Q1-25 will now be spent in Q2-25

B. Even though most tariff policy was pulled back, it created lots of uncertainty and volatility that reduced consumer spend in back half of Mar-25

C. Chime's installment loan and MyPay product likely growing quickly and can offset seasonal decrease in Q2 revenue vs. Q1 revenue at least in near term

D. Chime has built up enough brand equity, hype and investor expectation around a 2025 IPO that it won't be prudent to wait longer

What does this practically mean? There's enough indication for Chime that Q2-25 is going to be better than Q1-25 that they are okay with waiting out the volatility and regrouping around a short-term delay. If volatility does subside, we should see an S1 filing in the next 1-2 months with anticipated IPO by Aug-25.

Original thinking circa April 1st 2025

My completely personal view as an experienced fintech operator who understands the ecosystem well on what is happening with Chime's IPO. It does not represent the views of my current or former employers - it's my own over-engineered fintech take.

The Klarna IPO delay is definitely not a great indicator for Chime IPO timing (in the next 4 weeks). If Klarna couldn't get enough commitments to be comfortable with IPO at the price they've set, there's no way Chime is going to follow suit (yet). I had previously thought they would drop an S1 right around today with a target IPO date of the last week of April. I no longer think that's the case.

That said, it's not all tears and fears. There's some indication that the pain we're feeling now in the stock market will improve over the next few weeks. The US literally put a tariff on everyone, how much worse can it get (famous last words). More likely, America pulls back or renegotiates some of these tariffs.

And we can't argue with the fact that at current prices, any stock you pick is definitely on sale. If you have any shred of optimism, you're buying stock now. It's no wonder that retail investment inflows was the highest it was in the past decade. And it's not surprising that even in this market, Circle filed its S1.

I also think that practically speaking, Chime will want to IPO before Q1-25 financials are due. Unless markets get materially worse, there is no way they want to have to rewrite their S1 and talking points by letting this delay more than a few weeks. We've seen Chime launch Chime+, mention Instant Loans, announce Chime Enterprise, wrap ATMs. They built up a TON of brand around a now or soon to be released S-1. That's an important cost.

That's in addition to a lot of business / financial reasons for Chime to launch in early Q2 and it's all about the fundamentals of the business. Chime's core demo is paycheckers, and this demo tends to get tax refunds and spend it. That means Chime's Q1 is going to be massive, as it always has been. There's a reason we ran 80% of Chime's fundraising rounds around Q4/early Q1. It's a proven formula.

Chime will want to have an S1 with full year financials, IPO, and then immediately report Q1 which will be outsized. They do not want to report Q1 in S1 and then have to report a lower Q2 after. It feels weird to say this about fintech, but for this demo, the business IS seasonal.

So for Chime, the decision tree is - do we do this IPO now (or in a few weeks) or do we push this out at least 6 months or longer? I definitely can see a small delay, but the idea of pushing this out 6+ months for some future uncertain IPO window seems pretty unrealistic. I can't see them doing that, knowing what we know today.

Where does that leave us? I think Chime will still post their S1 sometime in the next few weeks with a target IPO date of no later than end of May. Any time after that and the SEC will pressure them to include Q1 financials which just throws off everything.

Let's see what happens!