After several years of a slow deal pipeline, U.S. fintech IPOs rebounded strongly in 2025. The concerns about inflation and high interest rates that had made investors risk-averse dissipated this year, despite ongoing macroeconomic uncertainty linked to the United States’ trade policy.
2025 saw several long-awaited big-ticket deals come to fruition, including Chime, Circle, and Klarna. Deal flow has remained steady in the second half of the year, with Wealthtech making its market debut in December.
While the fintech IPO resurgence is welcome, it comes with a reality check. Public markets are less forgiving than their private counterparts—whose complex methodologies for calculating valuations often result in overly high expectations for startups. The process requires estimating future revenue/EBITDA multiples, a target return on investment (often 20-50% or more), and then discounting that future value back to the present. The assumptions around exit timing and target returns are subjective.
It is thus unsurprising that the share prices of Chime, Circle, and Klarna – all erstwhile high flyers in private markets – have fallen by double digits since their respective IPOs—though these are early days.
Chime: Overreliance On Interchange Fees
The June 2025 IPO of Chime, the biggest American digital bank, was a success. The San Francisco-based company priced its market debut at US$27 per share, above the expected range, raising US$700 million at a valuation of US$11.6 billion. Chime’s arrival in public markets was long anticipated and helped thaw an erstwhile tepid fintech IPO pipeline.
Yet since then, Chime’s share price has fallen 28%. On the one hand, investors are likely reacting to a perception the stock was initially overvalued.
On the other hand, Chime remains unprofitable. In the third quarter, revenue grew a brisk 29% to US$544 million, surpassing sales guidance, while its active member base grew 21% to 9.1 million. But Chime still lost US$55 million in the September quarter but posted a significant improvement in adjusted EBITDA of $29 million.
With 22 million customers, Chime exceeds the size of U.S. online banks like SoFi, Dave, and MoneyLion, according to a 2024 Cornerstone Advisors survey. It has been successful tapping into a market where there has historically been limited competition given fragmentation, regulatory barriers, and hesitancy among American consumers to switch banks.
The online lender relies on interchange fees for its core business, offering no-fee banking services, debit cards, and early paycheck access. These fees account for about 72% of revenue and are paid by merchants when customers use their Chime debit or credit cards.
The company’s model, and that of its bank partners, is built on a regulatory exemption from the Durbin Amendment for banks under a certain asset threshold. This allows them to earn higher interchange fees than large, regulated banks.
Yet the model is inherently risky because Chime is betting that it can continue to enjoy a regulatory exemption that may not last. The digital lender is much less diversified than traditional banks, which have revenue streams from lending, wealth management, and other fee-based services.
Klarna’s BNPL Challenge
After several years of delays, Klarna finally went public on the New York Stock Exchange (NYSE) in September at a valuation of US$15.1 billion, which is about 1/3 of what it was worth in private markets back in 2021. Although the fintech IPO itself was considered successful, the company’s share price has dropped 35% since September as investors worry about Klarna’s ability to generate sustained profits.
While Klarna’s third-quarter revenue reached a record US$903 million, its net loss widened to $95 million. Klarna says that it posted a loss mainly due to a US$235 million provision for credit losses, an accounting requirement tied to the rapid growth of its expanding Fair Financing product.
The U.S. is a key growth area for Klarna, but its credit loss rates are higher there than in its core European markets. This is partly because Klarna must compete more directly with traditional credit cards in the U.S., where its primary users tend to be consumers who need more time to pay.
With its core BNPL product showing its limitations, Klarna has decided to hop on the stablecoin bandwagon as part of its diversification strategy. In a news release, Klarna explains its rationale for the issuance of KlarnaUSD, which is currently in a testing phase and will be available to the public on mainnet in 2026—likely in the middle of the year. Citing consultancy McKinsey, the Swedish fintech giant says that stablecoin transactions now exceed US$27 trillion a year and could overtake legacy payment networks before the end of the decade.
Launching a stablecoin does not fundamentally address the issues with Klarna’s current business model, but it could reduce the US$32.7 billion in cross-border fees the company pays, lowering its costs and allowing it to make faster payouts to merchants.
As Crypto Goes, So Does Circle
Speaking of stablecoins, Circle’s June IPO was a blockbuster fintech IPO, raising $1 billion at an $8 billion valuation. Shares surged 168% on its first day (June 5th) after pricing at $31 and opening at $69 on the NYSE. Investors rushed to snap up the shares of the USDC issuer, which benefited from optimism about stablecoin regulation (the GENIUS Act).
Since then, the company’s shares have fallen about 50%. However, unlike Klarna and Chime, there is no fundamental shortcoming in Circle’s business model. Rather, investors are reacting to how lowered interest rates may impact Circle’s core revenue from USDC reserves. Lower interest rates will reduce the company’s income on cash and U.S. Treasuries.
In addition, the ultra-volatile crypto market is currently experiencing a downturn that Circle cannot escape. Macroeconomic jitters, year-end portfolio rebalancing, and high investor leverage leading to forced liquidations are all factors that have pushed crypto market capitalization to under $3 trillion, down from $4.3 trillion in October.
Auguring well for Circle is its strong third-quarter performance. The company’s net income tripled to $214 million, driven by increased USDC stablecoin circulation boosting reserve income, despite a lower return rate on those reserves. Total revenue reached $740 million, beating Wall Street estimates. Other highlights of the September quarter for Circle included a 60% rise in reserve income, strong service revenue growth, increased operating expenses from headcount, and an overall beat on earnings per share.
What To Expect In 2026
Looking ahead, the U.S. fintech IPO pipeline is likely to remain robust in 2026. One possible big-ticket deal next year is Airwallex. In mid-2024, CEO Jack Zhang said that the payments unicorn was aiming to be fintech IPO-ready by then. Airwallex’s financials have continuously improved over the past few years, and it recently closed a $330 million Series G funding round that valued it at $8 billion.
When talking about fintech IPOs, one cannot help but think of payments infrastructure provider Stripe, whose valuation has reached an astonishing $106.7 billion in private markets. Yet unlike some of its peers, Stripe has not mooted any timeline for its market debut. Its leadership is focused on long-term growth, prefers controlled expansion, and does not feel pressured by market hype. With that in mind, we would not bet on a Stripe IPO next year.
In contrast, a Revolut IPO next year would be unsurprising as one of the next fintech IPOs. The UK fintech unicorn recently reached a massive $75 billion valuation following a secondary share sale. Its financials are solid, having reported a net profit of $1 billion for the financial year ending December 31, 2024, on revenue of $4 billion. This marks the company’s fourth consecutive year of profitability.
However, there is one major caveat: Revolut still does not have a full UK banking license. If that issue gets resolved in the first half of next year, it would instill confidence in investors, making a fintech IPO in the second half of the year more likely. If not, then Revolut is unlikely to go public in 2026.
In any case, if 2026 is anything like 2025, it will be a busy year.
