Buy-now, pay-later firm Klarna raised $1.37 billion in its U.S. initial public offering on Tuesday, pricing shares above the targeted range in a highly anticipated debut that could help rekindle momentum for fintech IPOs.
Oversubscribed, But Valuation Slumps From 2021
The Swedish company, backed by Sequoia Capital, sold 34.3 million shares at $40 apiece, above the expected $35 to $37 range, giving Klarna a valuation of $15.11 billion, according to a Reuters report.
This, however, marks a steep 66% decline from its 2021 valuation of $45.6 billion, amid inflation and interest rate headwinds in recent years. The offering was oversubscribed 25 times, paving the way for other fintech startups to make their public debut.
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Klarna had paused its IPO plans in April due to market volatility stemming from the “Liberation Day” tariffs. The company, which began U.S. expansion in 2019, saw losses widen to $52 million in the quarter ended June 30, compared with $7 million a year earlier. Revenue for the quarter rose to $823 million from $682 million.
The stock is set to trade on the New York Stock Exchange on Wednesday, with the symbol “KLAR,” with Goldman Sachs, J.P. Morgan and Morgan Stanley being joint book-running managers.
‘Buy Now, Pay Later’ Spends Set To Hit Record Highs
Klarna’s IPO comes amid soaring usage of “Buy Now, Pay Later” or BNPL services, with the segment’s transaction volumes expected to hit $116.7 billion in 2025, more than double from 2022, and 7 times higher than in 2020. It has also been reported that 1-in-4 users of these apps miss payments.
According to a recent BankRate survey, one-third of Americans have used BNPL apps, with 24% of them reporting overspending on the platform, 16% missing payments, and 15% regretting making a purchase.
Conservative commentator Charlie Kirk recently slammed the BNPL business model as being “predatory,” saying that they are not regulated by the Credit Bureaus, and thus have no credit checks on people that they lend to.
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