What’s Happening With Chime Stock?

Fintech company Chime Financial (NASDAQ: CHYM) listed on the markets a little less than a month ago. While the stock surged nearly 40% above its IPO price of $27 to open at $43, it has corrected sharply since, trading at just about $32 as of Tuesday. So what’s been driving the sell-off, and what lies ahead for Chime stock?

Image by Markus Winkler from Pixabay

The threat appears to come from stablecoins, which could directly challenge Chime’s core business model. The Senate passed the stablecoin bill late last month, laying out a framework to regulate these digital currencies, which are pegged to the U.S. dollar or other fiat currencies. The move is expected to help legitimize this form of cryptocurrency, boosting competition for traditional and digital-first financial services providers. These digital tokens enable consumers to pay merchants directly from their cryptocurrency wallets, without having their payments routed through the traditional bank or card networks. There’s a big incentive for merchants to adopt these currencies, since they offer lower fees and faster settlements. Chime, being a digital-first banking company that operates without physical branches, could be somewhat vulnerable.

Chime focuses on offering low-cost financial services via sleek, mobile-first interfaces. This approach has resonated with younger users and underserved segments, particularly those put off by traditional banks’ fees and requirements. But these users are also more price-sensitive and tech-forward. That makes them more likely to adopt stablecoins if they offer even greater convenience or savings. Chime also generates most of its revenue via interchange fees  –  small fees merchants pay when a customer swipes a Chime card. However, these very fees could come under pressure if stablecoin wallets enable peer-to-peer and peer-to-merchant payments that bypass card networks altogether.

Chime Well Positioned To Adapt?

Is the stablecoin an existential threat for Chime? We think not. Retailers have tried to pivot away from credit cards in the past with limited success. For instance, pay-by-bank solutions, which allow customers to pay merchants directly from their bank accounts, have struggled to gain traction in the U.S., despite offering cost advantages. Stablecoins could face similar headwinds. Cards remain the preferred option for most consumers. They are ubiquitous, easy to use, tie into the current banking system, and their use has become second nature to most consumers.

Chime has some optionality in a sense. It isn’t deeply tied to traditional core banking infrastructure – it relies on partner banks for its backend operations. This asset-light structure gives Chime more flexibility to adapt its model. If stablecoins do gain mainstream adoption, Chime could pivot away from card-based payments and build out its own stablecoin-based solutions, capitalizing on its strong brand and large and engaged customer base.

Chime’s core business has actually also been picking up. Revenue grew by over 30% in 2024 and surged by 32% in Q1 2025. The company’s profit trajectory is also improving. While net losses stood at $25 million last year, they narrowed compared to 2023. Chime was actually profitable in the first quarter of 2025. The turnaround indicates that the sizable investments that Chime has been making in marketing and brand building are paying off.

For perspective, Chime spent over $500 million in 2024 alone for marketing. Valuation-wise, Chime’s current price around $32 implies a market cap of about $11 billion, meaning that it trades at about 6x trailing revenues –  which is not exactly cheap. That said, the company’s relatively fast growth and improving margins justify this to an extent.

Investing in a single stock like CHYM can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, which includes 30 stocks, has consistently outperformed the S&P 500 comfortably over the last four years. What’s the reason for that? As a whole, HQ Portfolio stocks have yielded higher returns with lower risk compared to the benchmark index, providing a less turbulent experience, as evidenced by HQ Portfolio performance metrics.

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