Swedish BNPL (Buy Now, Pay Later) giant Klarna Bank AB is eyeing a U.S. IPO (initial public offering), with filing set for next week, according to a Bloomberg report. Notably, Klarna seeks to raise at least $1 billion through the public listing, with its valuation pegged at roughly $15 billion. Klarna had already filed for a secret listing with the U.S. SEC (Securities and Exchange Commission) in November 2024.
The IPO could be priced in early April, the report added, citing people familiar with the matter. Klarna’s public market debut would most likely be on the NYSE (New York Stock Exchange). However, the discussions are in initial stages and the details could change on finalization. The fintech company is working with nearly 15 banks for the listing, including Goldman Sachs (GS), JPMorgan Chase (JPM), and Morgan Stanley (MS), among others.
Klarna Is Streamlining Ops Ahead of the IPO
Klarna is a major BNPL service provider with operations across 26 markets around the globe. The company recently announced its intent to expand into the cryptocurrency market. Klarna is a private company and has the backing of some renowned investors such as Japan’s SoftBank (SFTBY), Dragoneer, Chrysalis Investments, and Sequioa Capital, which has the largest stake of about 22%.
Interestingly, Klarna has seen its valuation fluctuate significantly over the past couple of years. The BNPL player was once valued at $45.6 billion in 2021, but that value dropped to $6.7 billion in the following year. Klarna reported a series of mounting losses in prior years but has started narrowing them last year as it seeks to successfully debut on the U.S. public market.
The company is actively streamlining its costs and its balance sheet ahead of the IPO. It is also turning towards AI (artificial intelligence) to reduce its headcount and is offloading loans to improve its liquidity position. Klarna sold a majority of its UK portfolio to American hedge fund Elliott Investment Management and is in talks to sell a part of its U.S. loan book as well. In 2024, analysts projected that its value was somewhere close to $14.6 billion, based on the valuation of Chrysalis’ stake.
Will Klarna’s U.S. IPO Impact American BNPL Players?
Klarna already has operations in the U.S., but an IPO could further fortify its business presence on the American soil. Therefore, its U.S. listing could have some impact on the well-established American BNPL players. According to the latest reports available on Klarna’s financials, Klarna reported GMV (Gross Merchandise Value) of roughly $72.7 billion and revenues of $1.86 billion for the first nine months of 2024.
We used the TipRanks Stock Comparison Tool to compare three American BNPL players, including PayPal Holdings (PYPL), Affirm Holdings (AFRM), and Block (XYZ). Of the three companies, Block currently has the Strong Buy consensus rating and has the highest price target upside potential of over 65%. Investors can choose to invest in any of these stocks after thorough research.
