[U.S. IPO] Klarna Now Falls Below IPO Price After Initial 40% Surge

Klarna Now Falls Below IPO Price After Initial 40% Surge

TradingKey - Klarna, the fintech stock that surged 43% on its IPO debut, has now fallen below its $40 offering price, closing at $39.94 last Friday, September 26. Similarly, other payment service providers like Affirm and Block have experienced declines in their stock prices, with both seeing at least four consecutive days of losses.

Initially priced between $35 and $37, Klarna's IPO was oversubscribed by more than 20 times before launching at $52—30% above its IPO price—reaching a market capitalization of $17 billion by the end of its debut day trading.

Bloomberg analysts attribute the recent correction in high-growth fintech stocks to robust economic data that have dashed hopes for further interest rate cuts. Economic data released on September 25 indicated that the US GDP in Q2 grew at its fastest pace in nearly 2 years, while initial jobless claims fell to their lowest level since mid-July. This strong economic performance has reduced market expectations for an October rate cut.

According to Diksha Gera, an analyst at Bloomberg Industry Research, fintech stocks are highly sensitive to macroeconomic factors like interest rates and regulations. Although the Federal Reserve has begun cutting rates, any rate cuts slower than expected or signs of rising yields could drive up borrowing costs, pressuring market sentiment.

For Klarna specifically, Gera suggests that its IPO was overpriced. Furthermore, Klarna faces stiff competition from other fintech firms. Payment company Stripe is valued at $106.7 billion, while UK digital banking giant Revolut, which recently allowed employees to trade equity, has seen its valuation soar to $75 billion—a 66% increase in just one year.

Klarna is actively transforming its business model, recently launching deposit accounts and debit cards in Europe and the U.S. and expanding its "fair financing" service, which offers installment payments for large-ticket items. While this business line enhances net interest income, the potential credit losses from long-term loans necessitate increased reserves, putting pressure on performance.

Investors are closely watching whether Klarna can regain its growth momentum amid macroeconomic challenges and intense industry competition, as this will significantly impact its valuation.

Klarna Soars Over 40% on NYSE Debut, Testing Investor Appetite

TradingKey - On Wednesday, September 10th, Klarna (KLAR.US) made its debut on the New York Stock Exchange, opening at $52, which was 30% above its IPO price of $40. The stock experienced an intraday surge of up to 43% before closing up 14.55% at $45.82, giving the company a market valuation of $17 billion, underscoring the robust market demand.

Klarna, renowned for its "Buy Now, Pay Later" (BNPL) services, had initially expected its IPO price to range from $35 to $37. The offering was oversubscribed by more than 20 times even before launch.

This IPO has positioned early investor Sequoia Capital as a significant beneficiary. According to external sources, Sequoia holds 21% of Klarna's voting shares, amounting to 79 million shares valued at $3.15 billion at the IPO price. After deducting its cumulative $500 million investment, Sequoia's total returns now stand at approximately $2.65 billion. Sequoia sold 2 million shares in this IPO, representing around 2% of its total holdings.

Analysts suggest that Klarna's entry into the public market will test investors' confidence and interest in its future business direction. The company has recently been vocal about its plans to venture into banking. In the U.S., Klarna has already launched debit card and personal deposit account services, with 700,000 credit card customers signed up and another 5 million waiting to access the product.

Victor Jacobsson, Klarna's co-founder and CEO, remarked that the IPO is a milestone, akin to a "big party," but emphasized the need to continue progressing.

Jacobsson believes that this listing solidifies Klarna's business transformation, indicating that the company is no longer confined to BNPL. Industry insiders also suggest that leveraging BNPL as an entry point to generate long-term value, enhance customer value per transaction, and maintain financial health amidst stringent regulations and temporarily high interest rates could improve the company's valuation.

Moreover, Klarna's robust performance on its first day has further bolstered this year's momentum in U.S. IPOs. On Thursday, shares of cryptocurrency exchange Gemini Space Station are set to begin trading, followed by Via Transportation, a tech provider for public networks, on Friday. Klarna's success may instill confidence in the market for these upcoming new listings.

Klarna's IPO Fuels Buzz: Is the BNPL Industry Poised for a Breakthrough?

TradingKey - According to Bloomberg, European "Buy Now, Pay Later" (BNPL) giant Klarna finalized its IPO pricing on September 10, raising $1.37 billion at $40 per share, which gives the company a valuation of approximately $15.1 billion. This pricing surpasses the initial estimate of $35-37 per share, marking an 8% premium over the upper limit, and the stock was oversubscribed more than 20 times.

Klarna plans to issue 5.6 million shares in this offering, while executives, co-founder Victor Jacobsson, Sequoia Capital-related entities, and other shareholders, will sell an additional 28.8 million shares. Out of the raised funds, $1.17 billion will be allocated to shareholders, with $200 million going to the company.

The current valuation of $15.1 billion represents a significant drop from the $45.6 billion valuation when led by SoftBank Group in 2021. The company's valuation plummeted to as low as $6.7 billion in recent years due to the declining popularity of BNPL, tighter regulations, high interest rates, and intense industry competition. However, it has rebounded by 125% from that low. Given the challenging IPO climate for fintech firms in recent years, this valuation could mark Klarna's first successful showing in the public market.

The IPO is not just a milestone for Klarna but a litmus test for the entire BNPL sector: can this model achieve sustainable profitability, or is it doomed to be another bubble?

Analysts suggest that transforming the advantage of BNPL into long-term value could pave the way for a bright future for the industry. By shifting users from simple installments to more frequent products like savings, enhancing the value per customer, and maintaining financial health despite strict regulations and high interest rates, companies could potentially boost valuations.

Klarna is already making significant strides in transforming its business model, aiming to reposition itself as a digital retail bank. The company has recently launched deposit accounts and debit cards in Europe and the U.S. and is expanding its "fair financing" services, which involve installment services for high-value goods. According to documents submitted to the U.S. Securities and Exchange Commission, such loans make up about 2% of total transactions. The company noted that the number of merchants integrating this service has doubled over the past two years, with expectations of continued growth.

Klarna's stock is expected to begin trading on the New York Stock Exchange under the ticker symbol KLAR on Wednesday, led by Goldman Sachs, JPMorgan Chase, and Morgan Stanley.

BNPL Firm Klarna Set for IPO, Valuation Only Half That of Affirm Amid High Demand

TradingKey - Swedish fintech firm Klarna, is set to finalize its IPO pricing on Tuesday evening, as it continues to gain fame for its "Buy Now, Pay Later" (BNPL) services. The company is valued at just $14 billion, which is half of its U.S. rival Affirm Holdings' valuation, yet it is attracting strong investor demand.

According to Bloomberg, Klarna is offering 34.3 million shares, which have been oversubscribed by at least 8 times, with over 80% of shares being sold by early investors. Insider sources indicate that, due to robust demand, underwriters have adjusted the IPO price guidance to $37 per share, hitting the upper end of its market pricing range, with the possibility of even exceeding it.

Is a $14 Billion Valuation Too Low? Opinions Vary

Klarna's IPO valuation is significantly lower than Affirm Holdings' $28 billion. Roth Capital Markets analyst Rohit Kulkarni suggests that Klarna will not trade at the same valuation multiples as Affirm in the short term. However, the valuation discount positions Klarna advantageously in the IPO investment market.

Though both companies offer BNPL services, their business models differ. Klarna focuses on small, short-term loans, typically requiring payment within 30 days post-purchase. In contrast, Affirm often deals with larger purchases, offering long-term, no-interest loans without late fees. Consequently, the average order value for Klarna is $101 compared to $276 for Affirm.

In recent quarters, both companies saw similar revenue figures, yet Affirm's growth outpaced Klarna, which likely contributes to Klarna's inability to reach Affirm's $28 billion valuation. From April to June 2025, Klarna's revenue grew 21% year-on-year to $823 million, falling short of 3% of its platform's $31.2 billion transaction volume. Affirm, on the other hand, saw a 33% revenue increase to $876 million, accounting for roughly 8% of its $10.4 billion loan product sales.

Klarna's current IPO valuation is also below its 2021 peak of $45.6 billion but shows improvement from the 85% slump in 2022, which left its market cap at just $6.7 billion. This downturn was attributed to the deteriorating macroeconomic conditions due to the Russia-Ukraine conflict.

Bloomberg Intelligence analyst Diksha Gera estimated Klarna's market cap range to be between $12 billion and $16 billion, based on forward gross profit multiples of 11-14 times and a growth forecast of approximately 12% through 2025.

Industry insiders also argue that with Klarna's diversification into banking products such as deposit accounts and debit cards in Europe and the U.S., the company should be valued as a payment enterprise capable of challenging giants like Visa and Mastercard. Joakim Dal, a partner at GP Bullhound and a long-term investor in Klarna, expresses optimism about the company’s prospects, predicting it will eventually surpass $10 billion in business, with a pre-tax profit margin potentially reaching 20%, and expects transaction volumes to hit at least $50 billion by 2030.

Klarna Poised to Revitalize Fintech IPO Momentum Amid Rate Cuts

After peaking in 2021, the IPO market suffered as rising benchmark rates dampened investor appetite for new public offerings until the market reopened in May this year.

Dan Dolev, a senior fintech analyst at Mizuho Securities, suggests that interest rate cuts will lower financing costs, easing underwriting pressures on BNPL companies and supporting transaction volume growth. Anticipation of rate cuts has bolstered a positive outlook for Klarna’s prospects.

Gera further noted that Klarna's IPO might sustain the momentum set by new bank Chime and stablecoin issuer Circle. Moreover, a successful IPO could reignite fintech offerings and affirm the BNPL sector's viability. This would be significant for European peers like Revolut and Monzo considering U.S. listings.

However, Dolev warns of a contrary scenario; if the labor market continues to deteriorate, demand for loans could decline, casting doubt over Klarna's future prospects.

Klarna Eyes September IPO to Lead US Market Listing Wave

TradingKey - According to Reuters, Klarna, the Swedish fintech giant renowned for its "Buy Now, Pay Later" (BNPL) services, plans to relaunch its US initial public offering (IPO) in September. The pricing is set to be determined this week, with a range of $34-36 per share, aiming to raise nearly $1 billion. The target valuation for the IPO is between $13-14 billion, significantly lower than the nearly $50 billion valuation set in 2021 and earlier this year’s valuation of over $15 billion.

Klarna is an integrated fintech platform that combines payment solutions, consumer credit, and shopping services. Analysts assert that its core competitive advantage lies in offering BNPL payment solutions, which significantly enhance shopping flexibility and affordability, especially for high-priced items.

The company filed for listing with the SEC (Securities and Exchange Commission) in March this year but temporarily shelved plans due to market turbulence caused by tariffs announced by Trump in April. Back in 2021, Klarna also considered going public but opted out due to macroeconomic conditions affected by the tech industry downturn and geopolitical events, and subsequently experienced a significant valuation cut to approximately $6.7 billion in 2022.

On August 15, Klarna updated its filings with the SEC, including the latest financial results, indicating readiness to proceed with its listing plans.

Despite the company's IPO journey facing repeated obstacles, its impressive performance is undeniable. The prospectus reveals that Klarna's revenue has steadily increased over the past three years, with profitability improving, resulting in a turnaround to profitability, largely thanks to AI applications. In early 2024, Klarna launched an AI assistant supporting 35 languages, handling complex tasks in payments, shopping, refunds, and returns across 23 markets. Klarna indicates that this tool has saved the company roughly $39 million in costs during 2024.

Analysts believe that the current improvement in market liquidity will provide a favorable environment for the stock's listing. Inflationary pressures have eased compared to the same period last year, and there is a growing bet on interest rate cuts in the upcoming quarters. Analysts widely agree that if rate cuts materialize over the next four to six quarters, lowering consumer financing costs, it will benefit BNPL and payment penetration, which bodes well for the stock.

Furthermore, Klarna may spearhead the September US IPO wave. According to Bloomberg, 6 companies are slated to confirm their IPO pricing in the same period. Cryptocurrency exchange Gemini and blockchain finance company Figure have updated their IPO filings, while Blackstone-backed Legence Corp, beverage chain Black Rock Coffee Bar, and public transportation software company Via Transportation filed for IPOs in August. Bloomberg notes that if these 6 companies each set IPO prices in the second week of September, it will mark one of the densest periods of major IPO transactions since the IPO boom in late 2021.

Analysts suggest this IPO is seen as a crucial indicator for the US new stock market this year. If pricing and initial trading are stable, it could sustain the warming trend of the IPO window this year and enhance the market's appetite for risk on growth assets.