Klarna Secures $15bn Valuation

Swedish payments group Klarna has secured a $15.2bn valuation in its long-delayed US initial public offering, pricing shares at $40 and raising just under $1.4bn. The deal marks a critical moment for the buy now, pay later pioneer after tariff-driven market volatility forced it to shelve earlier plans to list.

The IPO, which was more than 25 times oversubscribed, will see Klarna begin trading on the New York Stock Exchange on Wednesday. Pricing came in above the $35–$37 marketing range set at the start of the week, reflecting strong demand from institutional investors looking for exposure to the resurgent fintech sector.

From Setback to Recovery

Klarna was one of several companies that halted flotation plans earlier this year after US President Donald Trump’s sweeping tariff announcements rattled equity markets. Investors pulled back from risk assets as duties on China and other partners surged, disrupting supply chains and raising fears of a wider downturn. Markets have since steadied after the White House paused some of its reciprocal levies, allowing groups such as design platform Figma and crypto exchange Bullish to raise more than $1bn each in recent months.

For Klarna, the timing has been crucial. The company, founded in Stockholm in 2005, saw its valuation crash from a SoftBank-backed peak of $46bn in 2021 to just $6.7bn a year later as rising interest rates punctured enthusiasm for lossmaking start-ups. Investors were unsettled by heavy operating losses tied to its costly US expansion and by a boardroom struggle that culminated in the departure of a key ally of co-founder Victor Jacobsson.

The IPO at $15bn represents a sharp recovery from those lows, but also underlines how far Klarna remains from its once-lofty standing as Europe’s most valuable start-up.

Financial Performance Under Scrutiny

Klarna has long been profitable in its home market, but its push into the US involved deliberately underwriting losses to capture scale. That strategy left it exposed when funding dried up.

The company reported a net loss of $53mn for the three months to June, compared with a loss of $18mn a year earlier, even as quarterly revenue rose 21 per cent to $823mn. For full-year 2024 it returned to a net profit of $21mn, rebounding from a $244mn loss in 2023.

According to its IPO filing, more than 13 per cent of revenue came from “reminder” and “snooze” fees levied on customers who missed or deferred instalments, underscoring regulatory concerns about the BNPL model. Critics argue that such charges target vulnerable borrowers and could prove volatile in a downturn.

Shifting Business Model

Klarna insists it is no longer a pure instalment lender. Chief executive Sebastian Siemiatkowski has outlined ambitions to build a full digital bank, with a growing suite of interest-bearing loans, a consumer debit card, and experiments in crypto services. Partnerships with more than 575,000 merchants and active user numbers exceeding 90mn give it reach that few European peers can match.

Technology is central to this repositioning. Klarna has deployed artificial intelligence for credit scoring, fraud detection and dynamic pricing, and partnered with OpenAI to embed conversational advice into its shopping app. Management argues that these tools improve customer outcomes while reducing default rates, though the business will remain under close scrutiny as regulators tighten oversight of instalment lending.

Broader Market Backdrop

The flotation comes as the US IPO market stages a cautious recovery after two barren years. Circle, the operator of the USDC stablecoin, has filed for a New York listing as crypto firms benefit from a friendlier stance in Washington. Apple, meanwhile, has been adjusting supply chains as tariffs reshape global trade patterns. Investors remain highly sensitive to geopolitical shocks, but appetite has returned for scaled technology groups with clear revenue momentum.

Klarna’s offer stands in contrast to its US rival Affirm, which listed in 2021 at a $12bn valuation and now carries a market cap of around $29bn. Klarna’s lower pricing could provide headroom for an early trading “pop”, though recent flotations such as Figma and Bullish have tumbled after initial surges.

Risks Remain

Analysts warn that Klarna’s valuation, while more conservative than in 2021, still assumes the company can sustain revenue growth, manage credit risk in a slowing economy, and navigate tightening regulation. The global BNPL market is projected to quadruple by 2030, but competition from banks, card networks and large tech groups is intensifying.

Moreover, Klarna remains exposed to shifts in consumer confidence. Its model depends on continued retail spending and low default rates. With US households under pressure from higher borrowing costs, any downturn could challenge its underwriting.

Regulators across Europe, the UK and the US are also weighing new rules on instalment loans. Requirements for clearer disclosure and affordability checks could raise costs and reduce profitability.

Milestone Moment

For now, the listing is a symbolic step for European fintech. Klarna is one of the few companies from the region to secure a double-digit billion-dollar IPO in the US market. Its performance on debut will be closely watched as a barometer for investor appetite towards consumer-focused fintechs after a bruising correction.

If shares trade strongly, it could encourage other groups to follow. If not, it may reinforce concerns that the sector remains overvalued and vulnerable to economic shocks.

Either way, Klarna’s $15bn flotation marks a defining moment for the company and for Europe’s ambitions in global fintech.