Klarna, the Swedish financial technology company known for its “buy now, pay later” model, made a significant leap into the public market with its recent initial public offering (IPO) on the New York Stock Exchange. The company’s stock had an impressive debut, soaring by 30% from its IPO price, settling at $52 per share. This valuation puts Klarna’s worth at approximately $15.1 billion, enabling the company to raise $1.37 billion, marking a significant financial milestone after its history of raising nearly $3.85 billion over its two decades of operation.
The company first hinted at the possibility of going public back in 2019, indicating to Bloomberg that an IPO could occur within a couple of years. While there were initial plans to launch earlier this year, market fluctuations influenced by tariffs and the broader economic landscape prompted a delay.
Klarna’s IPO is notable as the first major listing of the fall season, and it is anticipated to be followed by several others, including crypto exchange Gemini Space Station and ticket marketplace StubHub, both of which are expected to make their moves into the public market soon.
However, the journey to this IPO was not without challenges. Once valued at a peak of $45.6 billion in 2021, Klarna experienced a drastic valuation decrease of 85% to $6.7 billion in the following year due to pressures in the fintech sector, particularly stemming from rising interest rates and a shift in investor sentiment. Michael Moritz, Klarna’s chairperson and former Sequoia Capital partner, expressed frustration over the fluctuating perceptions of Klarna’s value, despite the company’s ongoing consumer popularity and strong market position.
As Klarna takes its first steps as a publicly traded entity, it faces numerous challenges, including regulatory scrutiny and expanding losses caused by increased reserves for potential loan defaults. To adapt to changing conditions, Klarna is also restructuring its workforce. Recent reports indicate that many remote employees will be required to return to the office several days a week to retain talent, while the company is shifting resources back toward customer service roles after an earlier move to automate support tasks with AI chatbots.
As the dust settles on its IPO, a closer look at Klarna’s major shareholders reveals substantial stakes from various investment firms. Sequoia Capital leads the pack with a stake valued at approximately $3.5 billion, having invested in Klarna since 2010. Other significant shareholders include co-founder Victor Jacobsson with a stake worth about $1.38 billion, and Heartland A/S owned by billionaire Anders Holch Povlsen, holding $1.36 billion worth. CEO and co-founder Sebastian Siemiatkowski retained approximately 6.8% of the company, translating to a net worth of about $1.17 billion following the IPO.
With the operational and market challenges ahead, Klarna’s shift to public status is bound to attract both the scrutiny and interest of investors as the company moves towards its next phase of growth in the competitive fintech landscape.
