Wealthfront, a wealth management advisory platform, is aiming for an IPO in the U.S. stock market with a target valuation of $2 billion

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 tap into strong market demand.

On December 2, it was reported that Wealthfront disclosed its plan to raise up to $485 million by issuing 34.6 million shares, including shares sold by existing shareholders, with an offering price range of $12 to $14 per share. The company and some shareholders will issue 21.47 million shares and 13.15 million shares, respectively.

According to its filing with the U.S. Securities and Exchange Commission, funds under BlackRock and Wellington Management may subscribe for up to $150 million in shares in the IPO, indicating institutional investors' interest in the deal. Wealthfront plans to list on the NASDAQ market under the ticker symbol "WLTH."

This IPO plan comes at a time when the U.S. IPO market is recovering. Following a downturn caused by uncertainties in trade policy, expectations of interest rate cuts by the Federal Reserve have boosted investor demand for new stocks. Goldman Sachs, JP Morgan, and Citigroup are acting as underwriters for this offering.

Strong Financial Performance and Continuous Profitability Improvement

Wealthfront was founded in 2008 by Andy Rachleff and Dan Carroll, primarily providing clients with automated tools for cash accounts, ETFs, and bond investments, as well as trading and low-cost loan services. The company is known for its automated investment products and online platform, attracting a large young customer base while offering bank-like services such as high-yield savings accounts.

Wealthfront's latest financial data shows robust growth. For the six months ended July 31 of this year, the company achieved revenue of $175.6 million and a net profit of $60.7 million. In comparison, revenue for the same period last year was $145.9 million, with a net profit of $132.3 million.

Although net profit decreased year-on-year, this was mainly due to changes in the tax environment. In the first half of this year, the company accrued $13.3 million in income tax reserves, while enjoying a tax benefit of $54.1 million in the same period last year. Excluding this impact, Wealthfront's adjusted EBITDA grew by 16% year-on-year, reflecting strong performance in its core business.

The company's assets under management are also continuously expanding, with $88.2 billion in platform assets highlighting its market position in automated investing. This figure provides Wealthfront with a stable revenue base from management fees, supporting its long-term growth prospects.

It is worth noting that Wealthfront's path to going public has been quite bumpy. In 2022, UBS had agreed to acquire the company for $1.4 billion, aiming to expand its high-net-worth client base. However, the deal later fell through due to shareholder opposition to the terms.

Compared to the acquisition valuation at that time, this IPO's target valuation of up to $2.05 billion represents a significant increase of approximately 46% from the $1.4 billion valuation in 2022. This valuation growth reflects Wealthfront's business expansion and profitability improvement over the past two years. The company secretly submitted its IPO application in June this year and officially launched the listing process after several months of preparation. According to regulatory documents, Tiger Global holds 19.7% of the company's shares, DAG Ventures holds 12.3%, and Index Ventures holds 11.5%. These early investors will receive substantial returns in this IPO.

The Surge of Fintech IPOs, Market Performance Diverges

Wealthfront's listing plan comes as fintech companies are initiating a new wave of IPOs.

Sweden's Klarna, American digital bank Chime, and other companies have successively entered the capital market, attracting widespread attention from investors. Automotive finance platform Lendbuzz and insurtech company Ethos Technologies have also submitted listing applications.

However, market performance shows a divergent trend. Although these companies experienced strong demand in the early stages of their listings, with stock prices soaring, both Klarna and Chime's stock prices have now fallen below their offering prices, reminding investors to pay attention to valuation rationality and long-term fundamentals.

The U.S. IPO market is recovering after a slump caused by uncertainties in trade policies. The rising expectations of interest rate cuts by the Federal Reserve have boosted investor demand for new stock offerings, providing a favorable listing window for fintech companies