On September 2, Klarna published its IPO prospectus, outlining plans to offer 34.3 million shares at a price range of $35–$37 per share. If sold at the midpoint of this range, the offering would generate approximately $1.2 billion, positioning it among the largest initial public offerings of the year. The company’s shares will be listed on the NYSE under the ticker “KLAR,” with the IPO tentatively scheduled for Wednesday, September 10, though the precise date remains unconfirmed.
Klarna, a Swedish financial technology firm, specializes in buy-now-pay-later (BNPL) solutions for retail consumers. Recognized as an innovator in the BNPL space, Klarna enables customers to defer payment or pay in installments, enhancing affordability and convenience—particularly among younger demographics. This model distinguishes Klarna from traditional credit systems, as BNPL is integrated directly into the point-of-sale process, simplifying transactions for both consumers and merchants across its primary markets in Europe and North America.
The platform delivers significant benefits to merchants by increasing transaction volumes and reducing cart abandonment through flexible payment choices. Merchants receive immediate payment while Klarna assumes responsibility for customer credit management, streamlining operations for businesses.
With over 100 million active users and more than 790,000 merchant partners worldwide—including prominent brands such as H&M, Sephora, Adidas and Expedia—Klarna maintains a substantial global presence. Its reach spans 26 countries, including major markets like the United States, the United Kingdom, and Germany, solidifying its leadership within the BNPL sector.
Following the acquisition of a full banking license in 2017, Klarna has broadened its services to include savings accounts and debit cards in selected regions, furthering its evolution into a comprehensive financial services provider. This expansion supports Klarna’s commitment to delivering a seamless shopping experience, enabling consumers to access diverse payment options without navigating away from the merchant’s interface and improving convenience alongside conversion rates for merchants.
Klarna’s strategy of aggressive market expansion has resulted in the highest gross merchandise volume (GMV) and active user base in comparison to key BNPL competitors Affirm (AFRM) and Afterpay (owned by Block, ticker XYZ). For additional context, Klarna reported $112 billion in GMV over the trailing twelve months; Affirm reached $34 billion, while Afterpay recorded $8.2 billion in GMV for Q3 2024, which annualizes to roughly $33 billion.
Klarna has transitioned into a multi-functional “super app” that offers much more than payment processing. The application provides resources for personal finance management, direct-to-consumer shopping, virtual retail experiences, and influencer integrations, creating a comprehensive ecosystem that distinguishes Klarna from conventional payment service providers.
Klarna has recently demonstrated robust growth, achieving top line expansion rates of 15% to 20%, driven significantly by its integration with Stripe. Anticipated collaborations with JPMorgan Payments, Worldpay, and Nexi are expected to further grow Klarna’s merchant network. Additionally, the company introduced OnePay Later powered by Klarna at Walmart, offering installment loans to millions of U.S. consumers. Upon completion of its rollout, OnePay Later Powered by Klarna will become the exclusive term financing solution at Walmart. Klarna has also extended its established partnership with eBay to the U.S. market following successful implementations across Europe.
While there are compelling reasons for consumers to adopt Klarna’s services and for investors to consider the company’s stock, it is important to acknowledge less favorable aspects as well. For example;
*There was a lack of internal control issues in 2022 and 2023, which the current auditor cannot confirm successful remediation has occurred as of the the end of 2024.
*The Class A shares that are offered to IPO investors will receive one vote per share, Class B and C shares will receive 10 votes per share. This super voting class gives the pre- existing shareholders significant say over corporate governance matters.
*The IPO valuation of approximately $13.5 to $14 billion is much lower than the earlier round of over $45 billion, when it was the most valuable European startup. The cut in valuation came in 2022 as central banks raised interest rates and the valuations of public and private companies plunged.
*Klarna is domiciled in Sweden and as a foreign company listed on the NYSE they are granted extended filing periods, particularly year end.
The company may choose to voluntarily comply with US standards but technically doesn’t have to. For example, Klarna will not be required to file its annual report until four months (120+ days) after the end of each fiscal year. Normally, U.S. companies have 60 days after their fiscal year end to file if their public float is worth more than $1 billion (which Klarna looks like it will be).
*Many undifferentiated providers have entered the BNPL business. Each offers generally the same service, deferred payments for purchases that are interest-free or at low interest rates.
Ultimately, we view Klarna as an industrial strength player in the global BNPL market. We are intrigued by the company’s twenty year operating history, functional appeal and global reach.
