Shares of Chime Financial rallied 44% in August after the company delivered a stronger-than-expected second-quarter earnings report, with revenue growing 27% to $670 million and earnings per share swinging to a positive $0.07 from a loss a year earlier. The company also raised its full-year revenue guidance to between $2.725 and $2.745 billion, up from the prior range of $2.66 billion to $2.69 billion, and adjusted EBITDA guidance to between $465 million and $475 million, up from $416 million to $431 million. Adjusted EBITDA margins hit 15% in the quarter, a more than 12 percentage point improvement year over year, driven partly by the effective use of artificial intelligence in back-office and marketing functions. Chime also introduced Chime Prime in April and Chime Invest in July to attract and retain members, and management highlighted that revenue per member has grown 24% over the past four years while the cost to serve each member has decreased by 35%. The stock now trades at a market cap of $12.8 billion, roughly 4.7 times this year's revenue estimates and about 27 times this year's EBITDA guidance, though the company relies on partner banks for deposits and loan risk, which could pose risks in an economic downturn.
Chime Financial, Inc. Class A Common StockStrong Q2 earnings beat with raised guidance drove the stock rally.
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