An Overview of Klarna: The “Buy Now, Pay Later” Pioneer and its New Public Offering

What Is Klarna?

Klarna (NASDAQ: KLAR) is a Swedish financial technology firm that has become the public’s mainstream method of using the “buy now, pay later” model in the modern age, offering customers the flexibility of paying overtime in an intuitive and streamlined manner. Klarna started in 2005 in Stockholm, Sweden and grew rapidly, acquiring SFORT in 2014, another online payment method. Soon after, Klarna became the fastest growing online payment-group in Europe. Now, the company is a staple because of its offering of convenient financing options to consumers across the globe.

Going Public

Klarna announced that they would be going public on September 10^th of this year. The company priced its initial public offering (IPO) at $40.00 with a total of 34,311,274 shares. On the day of opening, the stock price rose above its expected range to $45.82, ultimately raising $1.37 billion. By the end of the day, Klarna was valued at $17.4 billion, an increase from its past valuation when the company was private. Now, a month later in October, the stock price has remained close to $40 during the early part of the month. Throughout the month, however, the price has shown a slight downward trend. This movement is not a major concern, but it does suggest that the stock has not yet matched the strong performance seen on its opening day.

 Klarna’s Motives

In 2021, Klarna reached its valuation peak at $46 billion before dropping to $6.7 billion in 2022 and remaining around that number for the following years. This is likely the main motive for Klarn going private: although still successful, the company has not grown in the past few years, so the public offering could have been a catalyst for further growth. However, it is important to note that while it has already grown in its short time on the market, the company is still far from its valuation peak of $46 billion back in 2021. It could take months or even years for Klarna to reach this peak again, helping explain their need for new capital through the public offering.

Looking Forward

Klarna’s new chapter as a public company marks a major turning point in the company's nearly two-decade history. While the stock has shown a downward trend from its opening day, it's only been public for a month, so there’s still plenty of time and resources to grow. If Klarna can sustain growth in the long-term, it can recover towards its former valuation peak and continue expanding into the future as “buy now, pay later” models become more prominent in the retail and online shopping market.