N26 becomes a public limited company: is the N26 share coming soon?

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• N26 announces conversion into a German stock corporation
• The Neobank has been discussing going public for some time
• Investors will probably have to wait at least two more years for N26 shares

The digital bank N26 informed in a press release at the beginning of November about “the forthcoming conversion [der] Legal form from a German GmbH to a German stock corporation (AG)”. This step would create “the necessary conditions to be able to carry out the conversion into a European company (Societas Europaea, SE) in the future,” it said. At the same time, the conversion into an AG, however, can also be seen as preparation for a possible IPO of N26, especially since it is explicitly mentioned that it is also being undertaken to advance the corporate strategy – and the two founders Valentin Stalf and Maximilian Tayenthal had already hinted in the past that an IPO is definitely part of this strategy.

N26 has been preparing for a possible IPO for some time

As early as March 2021, Co-CEO Tayenthal told the “FAZ” that they wanted to be ready for the IPO “within a year”. At the time, he even held out the prospect of an IPO as early as 2022, but admitted that there was no rush. And so, at N26, this question was apparently taken rather comfortably. Because at the Mobile World Congress in the spring of 2022, Tayenthal confirmed, according to “cardscout”, that the neobank was “structurally ready for the IPO by the end of 2022”, but held out the prospect of the IPO for 2024 at the earliest – again with the statement that you are not in a hurry. Nor was it communicated at the time what the structural readiness should look like, but it is likely that this will now be achieved with the conversion into a stock corporation.

Co-founder Valentin Stalf recently confirmed this in an interview with “WELT”, but also remained cautious. “We have always said that we want to further professionalize the company, also with a view to a possible IPO. This transformation is natural [Umwandlung in eine AG, Anm. d. Red.] one step there. However, in view of the difficult stock market environment, it will certainly be a few more years before we go public. So we can’t name a specific date,” says Stalf. In general, however, it is only a good time for an IPO when profitability is within reach, according to the N26 CEO.

N26 still has to solve these problems before the stock market debut

At the moment, however, the smartphone bank still has a long way to go before it becomes profitable. In the 2021 financial year, N26 was able to increase sales by more than 50 percent to 182.4 million euros, but the loss still increased to 172.4 million euros. According to the startup, high marketing expenses, expenses for the failed market launch in the USA and other, unspecified costs were to blame. For the coming years, Stalf was nevertheless confident within the framework of the figures: “We are pursuing the goal of going towards profitability in the coming years,” said the co-founder, according to dpa-AFX. In 2022, for example, they want to increase revenues by around 30 percent.

The fact that sales did not grow even faster in the past financial year also has to do with another problem that N26 still has to solve before a possible IPO. According to a BaFin requirement, the fintech in Germany can only accept 50,000 new customers per month. In Italy, according to “WELT”, the supervisors even completely banned the acquisition of new customers. Potential investors are more likely to keep their hands off an N26 share given such growth restrictions. “Of course, that has to be fixed long before the IPO,” said Stalf in an interview with “WELT”. You work well with the regulators, but ultimately they would have to decide when the conditions would be lifted.

N26 IPO probably not before 2024

However, one factor that N26 has a bit more influence over is the aforementioned profitability, which the company says should be at least within reach ahead of an IPO. “We will […] become profitable as a company in about the next two years,” said Stalf in the “WELT” interview, which would soon at least fulfill this condition. When asked whether an IPO would take place within the next two years, the Co -Founder, however, evasive: “No, it may well take longer. But we are now making the company fit. Whether this will be followed by an IPO or first another round of financing with private venture capital is open – depending on the stock market environment and other factors,” says Stalf.

However, the CEO apparently does not worry that waiting too long when walking on the floor could result in N26’s technological lead dwindling and the N26 share becoming less attractive for investors. Even if the apps of traditional banks are getting better and better, you can still see “massive shifts in market share towards banks that understand technology” and digital development is now the core competence of N26. The startup has recently made it possible for selected customers in Austria to trade in cryptocurrencies and, according to statements in the “WELT” interview, is also planning a tool for stock trading. One day, trading in the N26 share should also be possible via this.

Editorial office finanzen.net

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