Intriguing IPOs: Chime Financial (CHYM)

Chime's business of providing low cost credit and banking to lower income customers is noble, but comes with plenty of risks.

Bindo Altoviti (Roman banker), Raphael, circa 1515, oil on canvas (National Gallery of Art)

The pace of IPOs has picked up quite a bit recently, so I’m doubling down on writing about IPOs this week.

A common piece of advice you’ll hear from financial writing folks is that controlling one’s emotions is as important as analyzing business. Controlling one’s emotions is most frequently referenced when discussing the buying and selling of stocks based on notions of fear or greed.

There is another instance where emotions often pop up in stock investing: Getting emotionally attached to a company. More often than we would all like to admit, there are companies we want to succeed beyond just padding our portfolios. Maybe it’s a compelling story, or it’s frustration with the existing status quo. Whatever the reason we have, there are companies we end up rooting for more than objectively analyzing.

The first few pages of Chime Financial’s (NASDAQ: CHYM) IPO prospectus reads like a company people want to succeed. The opening salvo for Chime’s IPO prospectus indeed reads like a business you want to root for. Who doesn’t want people in the lower income brackets to have better access to banking?

The challenge for investors is getting past the first few pages of management’s vision into the nitty-gritty of the business and evaluating the rest of the business dispassionately. In that regard, the company’s vision for better banking does come with some caveats.

Let’s dig in.

---

Shoutout to Koyfin for their data and charts. Koyfin has become an integral part of how I screen for, track, and analyze companies. Thanks to having a decade of data at my fingertips instead of manually going through stacks of quarterly and annual filings, the analysis process has become more thorough and much faster.

Up your analysis process by signing up for Koyfin. Click on the link below and receive 10% off your annual subscription.

Disclaimer: I have an affiliate partnership with Koyfin and receive compensation if you sign up via the link above. It helps me fund this endeavor. I would still recommend using it even if I didn’t have this partnership because it’s an awesome product, but I’d be stupid to turn down a revenue opportunity. You get a discount, Koyfin gets new business, and I get a commission. Win-win-win).