Four months after secretly filing the IPO document with the Securities and Exchange Commission (SEC), Swedish fintech startup Klarna officially filed it for public access to the New York Stock Exchange under the ticker symbol Klar.
Klarna is known for its “Now, Pay Later” service and has not disclosed the number of shares it plans to offer or the expected price range. The decision to list in the US is a blow to European stock exchanges and is struggling to maintain their own tech companies. Klarna CEO Sebastian Siemiatkowski has been suggesting for years that the US list is more likely, citing better visibility and regulatory benefits.
The equivalent of $46 billion in the SoftBank-led funding round during the pandemic was that Klarna faced a sharp decline as its valuation fell 85% to $6.7 billion in 2022.
The company has been on a comeback pass ever since. Analysts now estimate Klarna’s valuation at around $15 billion, up in 2023 as a return to profitability. The company reported a 24% increase in revenue last year, reaching $2.8 billion. Klarna fluctuated from an adjusted operating loss of $49 million in 2022 to a profit of $181 million in 2023, with an operating loss of $121 million per year.
Klarna joins the wave of high-tech startups looking at the open market after a delayed stretch in IPOs. Earlier this month, CoreWeave, a provider of cloud-based NVIDIA processors, submitted a prospectus. Cloud Software Vendor ServiceTitan was launched in December and marked its first significant venture-backed Tech IPO since Rubrik’s debut in April. Reddit has also recently joined NYSE. Still, market volatility could affect Kraruna’s plans. Nasdaq has just put together a fourth-week straight loss, reaching its lowest level since September before a modest rebound.
Founded in 2005 by Sebastian Siemiatkowski, Niklas Adalberth and Victor Jacobsson, Klarna was created to simplify online shopping with the BNPL model. With over 12 million active users each month and 55,000 downloads every day, Klarna has become a leading provider of the BNPL space.
Klarna’s “Buy Now, Pay Later” model allows consumers to split their purchases into installments. The company will compete with AFFIRM, which was released in 2021, and after its acquisition for $29 billion in early 2022, Klarna will compete directly with major banks such as JPMorgan Chase, Citigroup and Bank of America, as well as acquire credit card networks such as Visa and Mastercard. Digital-focused banks such as Revolut and Nubank are also competitors.
Klarna has been operating as a fully licensed bank in Europe since 2017 and is now focusing on US banking licenses. Currently, IT is partnering with Webbank for its American business. Siemiatkowski told CNBC in December that Klarna was investing $1 billion to accelerate its license to transfer money.
“We want to accelerate our remittance licensing,” Siemiatkowski told CNBC, adding that he is willing to invest $1 billion in the effort. Klarna “want to chase after these horrible credit card charges that American consumers are used to paying,” he said.
The Fintech space is heated. Bullock recently secured approval from the Federal Deposit Insurance Corporation to begin lending through its bank subsidiary Square Financial Services, expanding its short-term loan product, Cash App Rount. Competitors such as PayPal and Affirm are also strengthening their lending and payment services. Klarna needs to provide competitive rates and incentives to maintain the pace.
It remains to be seen whether Klarna’s IPO will ride the wave of recent public lists or face headwinds due to market uncertainty. But one thing is clear. The Fintech race is not over.
Founder of Klarna
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