Discover top fintech news and events!
Subscribe to FinTech Weekly's newsletter
Read by executives at JP Morgan, Coinbase, Blackrock, Klarna and more
A Fintech Giant Goes Public
Klarna, the Swedish buy-now, pay-later (BNPL) lender once valued as high as $45 billion, has finally made its long-awaited debut on the New York Stock Exchange. On Tuesday, the company announced it had raised $1.37 billion in its U.S. initial public offering, marking one of the most closely watched fintech listings of the year.
The IPO saw Klarna and some of its existing investors sell 34.3 million shares at $40 each, above the targeted range of $35 to $37. The higher pricing reflected strong investor interest, with one source familiar with the offering saying demand outstripped supply by roughly 25 times.
On Wednesday, trading began with a sharp rally. Shares opened at $52, about 30% above the offer price, before paring gains. By the closing bell, the stock settled just under $46 a share, still up 15% from the IPO price. At that level, Klarna was valued at approximately $17.4 billion.
From $45 Billion to $17 Billion
The current valuation highlights Klarna’s shifting fortunes. In 2021, following a surge in online shopping and BNPL adoption, the company was valued at more than $45 billion, making it Europe’s most valuable startup at the time. But rising interest rates and inflation triggered a sharp reappraisal of the sector, and by 2022 Klarna’s valuation had fallen to $6.7 billion.
The recovery to $17.4 billion shows investor confidence is returning, though the gap with its pandemic-era peak is striking. The IPO’s success suggests markets are once again open to fintech listings, but also underscores how rapidly conditions can change.
A Long Road to Listing
Founded in 2005, Klarna built its reputation by allowing customers to split purchases into smaller, interest-free installments. Its BNPL service became a global trend during the pandemic, as e-commerce soared.
The company was profitable for years but shifted into losses after expanding aggressively in the United States in 2019. In April of this year, Klarna paused IPO preparations as new U.S. tariffs disrupted global markets. With conditions stabilizing and investor appetite returning, the company revived its plans this summer.
The offering was led by Goldman Sachs, J.P. Morgan, and Morgan Stanley, and Klarna now trades on the NYSE under the ticker symbol KLAR.
Growth Versus Profitability
Despite strong revenue growth, profitability remains a challenge. For the quarter ending June 30, revenue rose to $823 million, up from $682 million a year earlier. Losses widened, however, from $7 million to $52 million over the same period.
Analysts stressed that while investors are once again showing enthusiasm for fintech IPOs, the market will demand evidence that companies like Klarna can balance growth with profitability. Rudy Yang, a senior analyst at PitchBook, told Reuters that fintechs will face close scrutiny in the current macroeconomic environment.
Competition and Brand Power
Klarna competes in a crowded sector. Rival U.S. neobank Chime went public in June, with shares jumping 59% on debut before sliding below their issue price. The performance illustrates the volatility that can follow high-profile fintech IPOs.
Industry analysts, however, argue that Klarna’s strong brand could give it an advantage. Kat Liu of IPOX, an IPO research firm, noted that in a fast-changing industry, brand recognition can matter as much as the business model itself. Klarna’s global profile and reputation may help it weather competitive pressures.
Consumer Behavior Supports BNPL
The BNPL model continues to see strong consumer demand. U.S. spending has remained resilient despite high inflation and slowing income growth. Klarna reported that for the 12 months ending June 30, 75% of its revenue came from transaction and service fees, while 25% came from interest income.
Analysts noted that the model depends on both transaction volume and repayment rates. Lower consumer spending could reduce fee income while increasing the risk of credit losses, a risk factor investors will monitor closely.
What the Debut Means
Klarna’s IPO is being viewed as a potential bellwether for high-growth fintechs returning to public markets. The strong opening day performance, despite profitability concerns, reflects renewed investor appetite after a quiet stretch for listings.
For Klarna, the $1.37 billion raised will support ongoing expansion and product development. For the wider sector, the listing may encourage other fintechs — from payments companies to crypto firms — to test the public markets after a period of volatility.
Conclusion
Klarna’s journey from a $45 billion private valuation to a $17.4 billion public debut underscores both the promise and risks of fintech. The company now faces a new chapter, one where investors will look less at growth alone and more at how quickly it can translate its vast user base and strong brand into sustainable profits.
