Wealth management advisory platform Wealthfront is aiming for a US stock IPO, targeting a valuation of $2 billion.

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Digital wealth management company Wealthfront plans to go public on Nasdaq, seeking a valuation of up to $2.05 billion, becoming the latest fintech firm to test the strong market demand.

On December 2nd, it was reported that Wealthfront recently disclosed plans to raise up to $485 million through the issuance of 34.6 million shares, including shares sold by existing shareholders, at an offering price range of $12 to $14 per share. The company and certain shareholders will issue 21.47 million and 13.15 million shares respectively.

According to documents filed with the U.S. Securities and Exchange Commission, funds under BlackRock and Wellington Management may subscribe for up to $150 million worth of shares in the IPO, showing institutional investors’ interest in the deal. Wealthfront plans to list on the Nasdaq market under the stock code "WLTH".

This IPO plan comes as the US IPO market is recovering. After a slump due to trade policy uncertainties, rising expectations of Fed rate cuts have fueled investor demand for new shares. Goldman Sachs, JPMorgan, and Citigroup act as underwriters for this offering.

Strong Financial Performance, Growing Profitability

Founded in 2008 by Andy Rachleff and Dan Carroll, Wealthfront primarily provides clients with automated tools for cash accounts, ETFs, and bond investments, as well as trading and low-cost lending services. The company is known for its automated investment products and online platform, attracting a large group of younger clients, and also offers high-yield savings accounts and other bank-like services.

Wealthfront’s latest financial data show robust growth. In the six months ended July 31 this year, the company posted revenues of $175.6 million and net profits of $60.7 million. In comparison, revenues for the same period last year were $145.9 million and net profit was $132.3 million.

Although net profit declined year-on-year, this was mainly due to changes in the tax environment. In the first half of this year, the company set aside $13.3 million as income tax reserves, whereas last year’s same period benefited from a tax incentive of $54.1 million. Excluding this impact, Wealthfront’s adjusted EBITDA grew 16% year-on-year, reflecting strong performance in its core business.

The company’s assets under management continue to expand, with platform assets of $88.2 billion demonstrating its market position in the automated investment sector. This figure provides Wealthfront with a stable base of management fee income, supporting long-term growth prospects.

It is also noteworthy that Wealthfront’s path to going public has been somewhat bumpy. In 2022, Swiss bank UBS agreed to acquire the company for $1.4 billion, aiming to expand its high net-worth client base. However, the deal was abandoned after shareholders opposed the terms.

Compared with the acquisition valuation at that time, the target valuation for this IPO is up to $2.05 billion, a significant increase of about 46% over the $1.4 billion in 2022. This growth reflects Wealthfront’s business expansion and profitability improvement over the past two years.

The company secretly filed for IPO in June this year, and officially launched the listing process after several months of preparation. According to regulatory filings, Tiger Global holds 19.7% of the company, DAG Ventures holds 12.3%, and Index Ventures holds 11.5%. These early investors are set for lucrative returns in this IPO.

Fintech IPO Boom, Diverging Market Performance

Wealthfront’s IPO comes amid a new wave of fintech companies going public.

Swedish company Klarna and US digital bank Chime have both gone public, attracting widespread investor attention. Auto finance platform Lendbuzz and insurtech company Ethos Technologies have also filed for IPO.

However, the market performance has diverged. While these companies enjoyed strong initial demand and surging stock prices at IPO, Klarna and Chime’s shares have since fallen below their offering price, reminding investors to pay attention to valuation and long-term fundamentals.

After a slump caused by trade policy uncertainties, the US IPO market is rebounding. Rising expectations of Fed rate cuts have fueled investor demand for new offerings, providing a favorable listing window for fintech companies.

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