Congratulations to Chime for going public! For those who don’t know, Chime is a financial technology company that partners with banks to offer mobile-first banking services. They provide checking and savings accounts, along with a debit card, focusing on features like early paycheck access, fee-free overdrafts, and credit building tools.

Let’s take a look at what investors and employees stand to make from this IPO. Please note that we will be using the opening day IPO price of $27 for this analysis. Most employees/investors will have a 6-month lock-up period, so their actual returns may vary depending on how the market views the company and how long they wait to sell.

Below is a graph of Chime’s preferred and common stock pricing over time. We didn’t include any of the rounds before 2018 because the pricing was so low we can assume they all had great returns. We also couldn’t find any employee prices from 2021 and 2022 within the S1, which is why there is a large gap in the graph.

This is purely a guess on our part, but it’s possible that at one point the strike prices did get to a much higher number, but these options may have been repriced to lower amounts in 2023.

Preferred Stock: How did the Investors do?

The Information recently published an insightful article detailing the performance of Chime's investors. You can read the full piece here. The short of it is anyone who invested in Chime before 2019 did amazing, and anyone who invested in 2020 and 2021 lost money.

Let’s see how the employees fared.

Common Stock: How did the Employees do?

Employees time! Here’s how we broke this down:

Below is a table of employees’ strike prices (the price employees pay to exercise their options) at certain dates according to the S1.

We guessed at the number of employees (Emp #) who received each strike price based on Chime’s LinkedIn.

We also include the cost to exercise 1,000 shares, and what those shares are worth today.

All exercise costs assume $0 in taxes, which is unfortunately rarely the case, but this allows us to compare these gross amounts apples to apples - as if they are being exercised and sold today.

Typically, there will be either short or long-term capitalgains associated with the sale (on top of AMT or income tax at the time ofexercise).

Anyone who started at the company before it hit 600 employees did great. They all received at least a 4x return and for the earlier employees all the way to a 39.71x.

The people who started within the last two years did well for the most part, at least beating the relative performance of the S&P 500.

The low strike price in March of 2023 would get you a 1.94x compared to about a 50% gain in the S&P over that same period. This goes down to as low as a 1.15x if you started 6 months ago, still beating the S&P which has been relatively flat since December 2024.

The most compelling aspect of the employee pricing lies in the strike prices for those who joined in 2020 and 2021. It’s not unreasonable to guess the strike price reached at least $30 within that time period. This is considering the fact that the Series G was raised at $69, and the employee price typically converges closer to the preferred price the later stage a company gets.  

We believe that if these higher prices did come into play, they were likely repriced downward to align with the March 2023 valuations. If this is the case, these employees still realized a decent return over a four to five-year period.

This scenario demonstrates one of the pros of employee equity: companies have the flexibility to reprice options downward, a significant advantage that preferred shareholders typically do not have. This doesn’t always happen, but it is the employee friendly thing to do.

Key Takeaways:

1. Employee pricing really kicked some butt compared to preferred prices. All the prices listed in the S1 are in the money, while the later rounds for investors are not even that close to the IPO price ($41 and $69 for the series F and G).
2. The 2021 Fintech bubble was real. Unfortunately, investors who put money in during 2020 and 2021 are down big, but at least they’re getting some of their capital back. It’ll be interesting to see how long it takes, if ever, to reach their peak valuation of $25B.
3. If true, the flexibility of employee stock option repricing proved to be a key advantage, potentially allowing employees from the challenging 2020-2021 period to still achieve respectable returns.

Overall Chime's IPO shows a stark divergence in fortunes between early investors and most employees compared to the investors who participated in the later funding rounds. The 2021 fintech bubble appears to have left later-stage investors with substantial losses if this IPO price holds after lock-up. Ultimately, Chime's journey to the public market underscores the volatile nature of tech valuations and the distinct risks and rewards for different classes of stakeholders.

Written by Sam Stroud, Investor at ESO Fund