Klarna Submits Application for U.S. IPO
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Klarna Submits Application for U.S. IPO

Klarna, a leading player in the buy now, pay later sector, has officially filed for its anticipated IPO in the United States.

The company has submitted a draft Registration Statement to the Securities and Exchange Commission regarding the proposed offering of its ordinary shares. While the specific number of shares and their price range have yet to be determined, there are expectations for a strong market debut, with speculation suggesting a valuation around $20 billion.

Chrysalis Investments, an initial backer of Klarna, recently increased its stake valuation from £100.3 million to £120.6 million. The implied valuation of $14.6 billion is significantly higher than the $6.7 billion valuation achieved during a funding round in 2022, although it remains well below the peak value of $46 billion reached in 2021.

In the first half of 2024, Klarna reported a 27% increase in revenue, driven by its aggressive implementation of AI technologies. CEO Sebastian Siemiatkowski indicated that these advancements could potentially reduce the workforce by half. The company’s adjusted profits for this period reached $66 million, a notable turnaround from an adjusted loss of $45 million in the same timeframe last year.

Klarna’s expansion efforts in the US market have been fruitful, as it now partners with 25% of the top 100 merchants, resulting in a remarkable 93% year-on-year increase in gross profit in that region, which has now become its largest market globally.

This IPO filing in the US presents a challenge for the UK markets, which were hoping to secure a significant public offering in their thriving tech sector.

Navina Rajan, a senior EMEA private capital analyst at PitchBook, noted, “Klarna’s choice to pursue an IPO in the US underscores the ongoing trend of fintech companies dominating our IPO pipeline. It also highlights a talent migration from some of Europe’s largest private firms to the US, as evidenced by the decline in European companies listing on local exchanges and the persistent valuation gap for tech firms between the two regions.”