Swedish fintech Klarna will begin trading on the New York Stock Exchange later on Wednesday after raising $1.37 billion in its initial public offering, ending a years-long wait for a listing and reinforcing a rebound in the U.S. IPO market.
The buy-now, pay-later (BNPL) lender is leading a slate of seven companies, including Winklevoss twins’ crypto exchange Gemini, poised to go public in New York by Friday, in what is set to be the U.S. IPO market’s biggest week in years.
The strong line-up sets the stage for an eventful fall window after tariff-driven volatility earlier in the year had slammed brakes on a revival of new issues following a near three-year dry spell.
Klarna and several other big names had halted their IPO plans in April after tariff-driven volatility roiled stock markets.
On Tuesday, Klarna and some of its investors sold 34.3 million shares at $40 each, above the marketed range of between $35 and $37. The IPO valued Klarna at $15.1 billion.
“$15 billion is far from disappointing given it was above Klarna’s price range and shows a continuing trend of issuers being conservative in initial valuation expectations to garner investor demand and to hopefully leave them wanting more,” said Samuel Kerr, head of equity capital markets at Mergermarket.
At its peak in 2021, Klarna raised funds at a $45.6 billion valuation, which slumped to $6.7 billion a year later amid rising inflation and higher interest rates.
The company had eyed a New York flotation for years, having considered a direct listing – a route that avoids selling new shares and the costs of a traditional IPO – in 2021.
BNPL IN FOCUS
Klarna, founded in 2005 when e-commerce was nascent, has since developed into a BNPL heavyweight, helping reshape online shopping with its short-term financing model.
BNPL allows shoppers to pay for products in small installments over time and has gained more popularity since the COVID-19 pandemic.
The business is gaining momentum as customers navigate sticky inflation, labor market cracks, and slowing income growth.
“Klarna’s IPO will be a thermometer, showing how hot, or not, investors think BNPL will be,” Brian Jacobsen, chief economist at Annex Wealth Management said.
U.S.-based rival Affirm commands a $29 billion market valuation and its shares have surged 45 per cent this year. Its latest quarterly report showed an average order value of $276, compared with Klarna’s $101 for the year ended June 30, according to its IPO filing.
While Klarna primarily targets smaller purchases and short-term loans, Affirm has focused on big-ticket purchases with longer zero-interest financing.
Profitable for the first 14 years, Klarna has grappled with losses in recent years as it expanded in the U.S. and other markets.
BNPL will steadily grab market share from debit cards in coming years, analysts have estimated, as shoppers increasingly embrace the flexibility to spread payments over time.
