Global Fintech Klarna is gearing up for an initial public offering (IPO) in the United States, with reports indicating the Swedish company could file publicly as early as next week.
The move, which follows a confidential filing with the U.S. Securities and Exchange Commission in November 2024, marks a significant step for the buy now, pay later (BNPL) Fintech as it seeks to raise at least $1 billion.
Targeting a valuation exceeding $15 billion on the New York Stock Exchange, Klarna aims to price its IPO in early April 2025, according to sources cited by Bloomberg.
This development comes amid a broader resurgence of interest in fintech listings, though it also raises questions about market conditions and the company’s trajectory.
Klarna, founded in Stockholm in 2005, has become a dominant player in the BNPL sector, claiming 85 million customers globally and partnerships with major retailers like Argos, Currys, and Uber Eats.
The company’s model, allowing consumers to defer payments interest-free or spread costs over time, capitalized on the e-commerce boom, particularly post-pandemic.
However, its valuation has been a rollercoaster: peaking at $45.6 billion back in 2021, it plummeted to $6.7 billion by 2022 amid rising interest rates and economic uncertainty.
The anticipated $15 billion-plus valuation suggests a strong recovery, though it remains well below its former high, reflecting a cautious recalibration of investor expectations.
The IPO arrives at a pivotal moment for Klarna, which has spent recent years refining its operations.
The company has shed non-core businesses, leaned rather heavily into AI to streamline processes—reducing headcount by 22% to 3,500—and expanded partnerships, such as with payment processor Stripe.
Additionally, Klarna has signaled its intentions to enter the cryptocurrency market, a move that could diversify its offerings but also introduces regulatory and volatility risks.
These efforts appear aimed at presenting a leaner, more focused entity to public investors, though profitability remains elusive after years of narrowing losses.
Of course, Klarna’s debut will not occur in isolation. It faces stiff competition from rivals like Affirm, Block (Square), and PayPal, all of which have established footholds in the BNPL space.
Affirm, already public, recently hit its highest share price since early 2022, hinting at renewed investor appetite for the sector. Block and PayPal, with their broader payment ecosystems, pose threats through scale and diversification.
Meanwhile, other fintechs like Chime and UK-based Zilch are also eyeing IPOs, suggesting Klarna’s listing could set a precedent—or even a warning—for the industry.
It’s worth noting that the $1 billion raise is substantial, but its success hinges on market reception. It also depends heavily on the current business and economic environment which is increasingly becoming uncertain due to planned tariffs in the US and an anticipated increase in inflation.
Notably, IPO volumes in 2025 have already outpaced early 2024, buoyed by AI-driven optimism and a 23% S&P 500 gain last year.
Yet, recent U.S. listings have shown somewhat mixed results, with some high-profile debuts faltering on their very first trading day.
Klarna’s performance could potentially signal whether fintechs can sustain momentum after a three-year IPO drought since 2021’s peak. However, going public is not always the most popular option as we’ve seen other firms focus on different strategies.
For now, the BNPL and larger Fintech industry watches closely, aware that Klarna’s outcome may shape the path for others waiting on the sidelines.