Impact of Initial Public Offerings on Klarna and other Financial Technologies
Klarna, the Swedish buy now, pay later (BNPL) giant, is set to go public on a US stock exchange with an initial public offering (IPO) potentially as soon as September 2025. The company initially planned an April 2025 IPO but postponed it due to market turmoil caused by new US tariffs and recession fears.
The revival of IPO plans aligns with recent improvements in fintech stock prices and a stronger US IPO market environment. Klarna's decision to proceed with an IPO now is influenced by several key factors.
Improved Market Conditions
Klarna delayed its IPO in April 2025 after tariffs announced by the Trump administration rattled the markets, causing uncertainty and a stock sell-off. By mid-2025, fintech stocks surged, and overall IPO market conditions strengthened, encouraging Klarna to reconsider going public.
Company Fundamentals
Klarna is profitable, with a last private valuation around $14 billion. Its BNPL product has nearly 100 million users worldwide. The company's delinquency rate, a measure of payment defaults, improved from 1.08% to 0.88% in Q2 2025, showing healthy consumer repayment trends despite economic headwinds.
Tariff and Recession Context
While tariffs generally cause consumer price increases and spending caution, Klarna’s BNPL platform can be positioned as an affordable financing option appealing to consumers facing higher prices, sustaining demand for its services in a challenging economic environment.
Strategic Readiness
Klarna’s CEO emphasizes meeting internal IPO readiness criteria. The company initially filed confidentially in November 2024 and publicly in March 2025 and is exploring optimized IPO formats such as a Dutch auction, inspired by Google's 2004 IPO approach.
Partnership Strength
Klarna’s robust ecosystem partnerships with companies like DoorDash, Walmart, and Stripe provide a solid foundation for growth and investor confidence post-IPO.
The US Market Advantage
The fees Klarna charges retailers for its services are generally higher in the US. However, Americans are more receptive to buying on credit compared to Europeans, and the costs of regulation and bureaucracy are lower in the US. Klarna's stock is set to debut under the ticker "KLAR" and raise more than $1 billion for the company at a valuation of $15 billion.
Klarna's US Expansion
Klarna recently announced an exclusive deal with Walmart, making it the sole provider of "Buy Now, Pay Later" for the world's largest retailer. The company's revenue from selling insights from its customers' purchase data to retailers has grown from $18 million in 2020 to $180 million today. Klarna aims to become a data company through premium partnerships and expanding into new markets.
Analysts' Views
Maximilian Wienke, an analyst at online broker eToro, believes Klarna has a good chance of achieving its targeted valuation in the IPO. Other fintechs and neobanks are closely watching Klarna's IPO. If it's a success, it might give some a good argument to follow suit.
In summary, Klarna’s IPO timing reflects a balance of improved market sentiment after prior tariff-related disruptions, the company’s solid business metrics and consumer appeal during economic uncertainty, and strategic planning for a successful public offering in the US. The financial sector has performed better than other sectors in the S&P 500, with a 7.6% gain over the past six months, boding well for Klarna's IPO prospects.
- The financial sector's improvement, with fintech stocks surging and the overall IPO market conditions strengthening, has encouraged Klarna to reconsider going public, aligning with the revival of their IPO plans.
- Klarna's decision to proceed with an IPO now is influenced by their robust business fundamentals, such as profitability, a large user base, improved delinquency rate, and the appeal of their Buy Now, Pay Later product, even during economic headwinds.
