Klarna Nears U.S. IPO After Striking Deal with Walmart
Klarna Nears U.S. IPO After Striking Deal with Walmart
Buy-now-pay-later giant’s IPO sent rival Affirm's stock down 6%
- Klarna, a buy-now-pay-later firm, has filed a prospectus for an initial public offering (IPO).
- The Sweden-based company announced it has reached a deal with Walmart to offer loans to customers.
- The IPO comes amid increased competition in BNPL and marks a win for the U.S. IPO market.
Klarna, a Sweden-based buy-now-pay-later (BNPL) firm on Friday filed its prospectus for an initial public offering (IPO), setting the stage for the company to list on the U.S. market later this year. The prospectus comes amid a volatile market, as investors’ uncertainty about the economy moves into question. The prospectus comes after a draft filing from last year, which sparked speculation about the IPO.
Investors have anticipated a Klarna IPO for several years. But the company, one of the larger players in BNPL decided to list int the U.S. instead of Europe, dealing a major blow to markets struggling for new listings.
The news is the latest signthe U.S. IPO market, which has struggled since the COVID-19 pandemic, is making a comeback. Earlier this year, CoreWeave, an AI developer backed by Nvidia (NVDA), filed its own prospectus to list on U.S. markets.
Klarna will trade with the ticker symbol KLAR. The prospectus doesn’t list the number of shares it will offer, nor does it give an expected price for the offering. However, in 2024, the company saw its revenue increase 24% from the year before, reaching $2.8 billion.
CNBC reported Klarna will provide its services to Walmart (WMT) customers through OnePay, in which it holds a majority stake. Klarna will handle the underwriting for loans through OnePay that will range from three to 36 months. The announcement deals a major blow to Affirm (AFRM), which handled BNPL for Walmart previously. Affirm dropped 6% on Monday following the news.
The deal is a major win for Klarna and provides a segue into U.S. operations. The company has a global footprint but Affirm has a larger footprint in the United States. The agreement is a “game changer,” according to (CEO) Sebastian Siemiatkowski.
In a statement published on Klarna’s website, Mr. Siemiatkowski went on to say the following: “Millions of people in the U.S. shop at Walmart every day—and now they can shop smarter with OnePay installment loans powered by Klarna. OnePay choosing Klarna as their exclusive installment loans partner at Walmart in the U.S. is a huge vote of confidence as we pursue our goal of being available everywhere for everything. We look forward to helping redefine checkout at the world’s largest retailer—both online and in stores.”
The IPO should raise a significant amount of funding for Klarna as it operates in an increasingly competitive business. Consumers are trying to ditch credit cards, and BNPL services typically offer more attractive interest rates on purchases, along with additional flexibility for the consumer. Klarna listed Affirm and PayPal (PYPL) as competitors.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. #@fxwestwater
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