After weeks of speculation, Klarna officially filed its IPO. The Swedish fintech, known for its “buy now, pay later” (BNPL) solution, had considered the move in 2021 but postponed the plans. Now, the startup seems to be taking a leap to become one of the major players in the global financial landscape, as it boasts a significant user base. The company has over 150 million personal customers globally, with a significant presence in the U.S. and Europe.
Klarna officially filed its registration statement with the U.S. Securities and Exchange Commission (SEC), unveiling its intention to list its shares on the New York Stock Exchange (NYSE). This is a curious choice, as fintechs and tech companies have preferred Nasdaq over the past decades.
The filing confirms that Klarna is targeting an IPO valuation that could be considerably lower than its previous (and arguably inflated) $46 billion valuation from 2021, following a series of market changes and the broader economic slowdown. The pricing is expected to occur in mid-April, but the fintech is targeting $15 billion.
While the exact pricing and timing of the offering remain undisclosed, this filing has brought expectations for new fintech listings on the UK and US markets, after a long hiatus. Data from PitchBook shows that between 2022 and 2024, 86 startups raised just $32.76 billion via IPOs. A fraction of what 101 fintechs raised in the golden year of 2021, which collectively gathered more than $296.86 billion on global stock markets.
Regulatory Challenges and Competition
Klarna’s IPO is seen as a potential turning point for the BNPL sector, which has been under intense scrutiny by regulators. The frictionless system and instant credit provided in this business model, perceived by the tech sector as innovation that favors consumers, are now suffering criticism, particularly over concerns about rising consumer debt in major economies around the world.
And regulators are not the only concern for the company. A combination of growing competition from other fintechs and shifting consumer behavior could also impact Klarna’s market debut. The platform will face stiff competition from established financial institutions and other fintechs, including Affirm, Afterpay, and PayPal. The BNPL sector is crowded, with numerous companies offering similar services.
Yet, Klarna has managed to weather these challenges, thanks in part to its diversified approach to business. The company has expanded beyond BNPL into offering a full suite of financial products, including personal loans and savings accounts, and is studying the introduction of crypto assets.
Klarna has also registered a loss in its most recent fiscal year (2023), losing roughly $250 million. The company has increased revenues since then. Management attributes the negative bottom line in part to the aggressive expansion strategy and continued investment in growth. Klarna’s management team has expressed confidence that its business model can return to profitability as the global economy stabilizes.
