Buy now, pay later company Klarna has filed its long-awaited IPO (initial public offering), with a $15 billion valuation mooted, according to reports.
The Swedish fintech is believed to be aiming to price the New York Stock Exchange IPO in early April and is hoping to raise around $1 billion of growth funding in what could be the first of several exciting new listings this year.
Klarna, founded in Stockholm in 2005, has become a dominant player in a ‘buy now, pay later’ sector, often shortened to BNPL, claiming 85 million customers globally and partnerships with major retailers like Argos, Currys (CURY), and Uber Eats.
Klarna is one of several players in the BNPL space that enable customers to purchase goods with the promise of interest-free credit. After launching in the US in 2015, Klarna hit a hefty valuation of more than $45 billion by 2021, a figure that swiftly plummeted by 85% to $6.5 billion due to market concerns over long-run growth, competition, and valuations.
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 and returned to profit in 2024. The company has shed non-core businesses, leaned heavily into AI to streamline processes, reducing headcount by 22% to around 3,500, and expanded partnerships, such as with payment processor Stripe. Klarna also plans to close offices in Amsterdam and the German city of Mannheim by the end of 2025, and won’t renew the lease for its office in Columbus, Ohio by the end of March 2027.
Klarna has signalled its intention to enter the cryptocurrency market, a move that could diversify its business but also introduce regulatory and volatility risks. These efforts appear aimed at presenting a leaner, more focused entity to public investors.
Faced with pressure to stem losses and become profitable, Klarna’s US rival Affirm (AFRM:NASDAQ) has leaned on interest-bearing lending, which made up 72% of its loans in 2024, 33% year-on-year growth.
Affirm’s progress saw its share price make strides higher during the latter part of 2024 but recent worries about the health of the US economy and president Donald Trump’s tariff policy, have seen the stock collapse this year, almost halving from February’s $80 highs. Notably Klarna recently snared a coveted position with leading retailer Walmart (WMT) from its already-listed rival.
Nonetheless, the same worries which have hit Affirm could spook investors and limit backing for Klarna’s IPO just when it needs support the most. Such uncertainty could also delay other IPOs this year, with AI chip tech firm CoreWeave, UK-based neo-bank Revolut and healthcare supplies business Medline among those being watched closely.
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