Klarna, the Swedish fintech best known for its “buy now, pay later” service, made its long-awaited Wall Street debut this week, briefly hitting a market value of more than $19bn (£14bn) as shares surged on their first day of trading.
The stock was priced at $40 in the initial public offering (IPO) but opened at $52, a jump of nearly 30%. The rally valued the company at $19bn, though by the end of the day shares had slipped back to $46, leaving Klarna worth closer to $17bn. Even so, the listing marked a milestone for one of Europe’s most prominent financial technology firms.
A Payments Giant with Global Reach
Founded in Stockholm in 2005, Klarna has built its brand by allowing shoppers to split payments into smaller, interest-free instalments. The model has attracted millions of users worldwide and drawn praise for offering a flexible alternative to credit cards. But it has also faced criticism over fears that it encourages consumers, especially younger ones, to overspend.
The company processed $105bn worth of transactions in 2023 and says it now has around 93 million active users in 26 markets. In Sweden, its home country, more than 80% of adults used Klarna’s service last year.
Chief executive Sebastian Siemiatkowski called the IPO a fresh opportunity to expand. In a message to staff, he said the listing would provide “fuel” for the company to accelerate growth in the US and other markets.
From Peak Valuation to Reality Check
The IPO raised about $1.37bn, with shares sold by Klarna and several long-term investors. But despite the strong debut, Klarna is still trading far below its pandemic-era peak. In 2021, a major investment from Japan’s SoftBank valued the business at more than $45bn. Rising interest rates and a tougher economic backdrop have since cut that figure by more than half.
The firm’s revenues grew 24% last year to $2.8bn, but losses remain a concern. Klarna reported a $52m loss in the three months to June, widening from $7m a year earlier, largely due to higher costs in the US.
How Investors See Klarna
Some backers argue the company is often misunderstood. Joakim Dal, a partner at Bullhound Capital, told the BBC: “In our view it’s more of a payment company than a lender. Klarna makes most of its money from fees charged to retailers, not from interest on customers. It’s about a smooth checkout experience rather than offering credit.”
That distinction, supporters say, makes Klarna more resilient than critics assume, even as regulators scrutinise the wider buy-now, pay-later sector.
Wall Street’s Pull
Klarna had originally aimed to list in April but delayed after new US tariff announcements unsettled markets. Conditions have since improved, with major American indexes climbing to record highs. Several other tech firms, including crypto exchange Gemini, are also preparing to go public this week to take advantage of investor appetite.
“For any tech firm planning an IPO, Wall Street is the obvious choice,” Dal added. “It offers the liquidity, analyst coverage and peer comparisons that you just don’t find elsewhere — and, in many cases, higher valuations.”
