Klarna Files with SEC for U.S. IPO Amid Market Speculation
Klarna Files with SEC for U.S. IPO Amid Market Speculation
Its short-term, no-interest installment plans can be more attractive than using credit cards
- Klarna Group has filed for a U.S. initial public offering (IPO).
- JPMorgan, Goldman Sachs and Morgan Stanley are the lead underwriters.
- The IPO is expected to come early next year after months of speculation around the listing.
Klarna, the Swedish buy-now-pay-later (BNPL) firm, confidentially filed a draft registration for an initial public offering (IPO) with the Securities and Exchange Commission (SEC) this week.
The statement was light on financial details, but analysts have put a valuation of around $15 billion on the company. The last time Klarna raised funds in 2022, the company was valued at $6.7 billion. While lofty, it was a marked decrease from the $45.6 billion valuation it received a year earlier in 2021.
The company’s valuation suffered from geopolitical instability in Europe, primarily from Russia’s invasion of Ukraine. The Trump administration is expected to put pressure on Europe's economic prospects over the next several years, as traders price in a potential trade war with the United States.
Klarna was founded in 2005 and is today one of the major servicers in BNPL. It enables customers to buy now with no-interest credit. The main offerings allow customers to split their payments over time, usually from a few days to six weeks. However, late fees apply if there are missed payments.
The filing didn’t offer details on the number of shares to be offered or the price of those shares. Klarna posted revenue of $1.5 billion for the first half of the year, rising 27% from the same period a year ago. Its main competitors are Affirm, Afterpay and Sezzle.
Industry reports suggest that nearly half of Americans have used a BNPL plan at least once to purchase an item over the past year. The appeal of no interest on short-term installment plans is an attractive option vs. credit cards.
Still, consumer advocates have sounded the alarm on BNPL, claiming it takes advantage of people and saddles consumers with too much debt. Government regulators have moved to protect consumers over the past year, but the Trump administration may create a clearer regulatory path for its U.S. listing.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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