As Chime, the digital neobank, files paperwork for a potential public offering in 2025, the buzz around the stock market is palpable. Investors are eager to know: Is this the start of an IPO resurgence? After the success of ServiceTitan recent public debut, speculation is high, with big names like Klarna, Stripe, and Revolut also rumored to be eyeing the IPO stage. But while expectations for a major IPO boom in 2025 are growing, the reality may be more complex than it seems.
Not All Strong Starts Lead to Success
Recent history serves as a reminder that a strong IPO debut doesn’t always guarantee long-term success. Take Groupon, for instance: it went public at an $18 billion valuation only to lose 99% of its value since its IPO. Similarly, Zynga shares fell 70% within a year of its 2011 IPO, and the company stock remains below $10 a decade later. The outcome of ServiceTitan IPO may serve as an early warning for other companies. If its stock price experiences a sharp decline, it could dampen enthusiasm, deterring other firms from jumping into the public market amid ongoing uncertainties.
Profitability Challenges Loom Large
Many of today tech darlings are far from profitable, despite their sky-high valuations. The tech boom of 2020-2022 led to massive funding influxes, but many startups focused on expansion rather than sustainable financial health. As growth slows and investors become more discerning, the focus is shifting toward companies with stronger financial discipline. The path to profitability can be long and challenging, as evidenced by Amazon, which took almost seven years after its IPO to turn a profit. As firms tighten their financial operations, fewer will be eager to take the public plunge—especially when profitability remains uncertain.
The Changing Landscape of Private Markets
Perhaps the most significant reason why Chime IPO might not open the floodgates is that the landscape of private markets has fundamentally changed. Entrepreneurs no longer view going public as the ultimate goal. Secondary marketplaces like Forge and ESOP solutions have made it easier for private companies to access liquidity without the need for a public listing. As a result, the allure of a ticker symbol is fading. Craig Coben, a leading journalist, argues that the rise of private markets is a “megatrend” and companies are finding better value in staying private or selling privately.
Moreover, going public brings with it a host of regulatory and scrutiny burdens. To succeed, leadership teams must balance the demands of institutional and retail investors. This shift can be a difficult one for companies led by founders accustomed to managing the freedom and flexibility of private markets. IPOs often require a complete overhaul of leadership and operational strategies, which can be a tough decision for founders who’ve successfully led their companies privately for years.
A Calculated Approach to IPOs
While Chime IPO may spark excitement, it unlikely to trigger a full-blown IPO revival in 2025. The market conditions, combined with the shifting perceptions of success among entrepreneurs, suggest that the IPO landscape will be defined by a smaller, more cautious group of companies. Timing might not be everything in today market—strategy is.
