Trump: “It’s time for round 2” 

Klarna: “Hold my beer” 

With Trump successfully showing his perseverance to take on the U.S. government once again (with another massive win in the column) - Klarna, the Swedish buy now, pay later giant who took 2021 by storm, has officially filed confidentially for a US IPO. And if that sounds familiar, it’s because this isn’t their first rodeo.

(Source: Giphy) 

Like Trump, Klarna has been here before, teasing us with an IPO back in 2021. But much like any promises on the Street, those plans were taken out behind the barn and shot. But now? They’re back at it, looking to float their shares in the U.S., and if successful, it’ll be the biggest Swedish IPO since Spotify in 2018. (Cue the ABBA soundtrack.)

(Source: CNBC) 

Now, what’s the valuation, you ask? Well, that’s the funny thing. For starters, Klarna’s valuation once rocketed from $5.5 billion to an eye-watering $46.5 billion during the pandemic. If you recall, fintech was hotter than a friggin 'Texas sidewalk in July, and BNPL was the thing. Everyone wanted to buy stuff they couldn’t afford, and Klarna was there to make sure they could feel broke in four easy installments. But then, reality hit hard—like, "my credit card bill after the holidays"-hard. Klarna’s valuation took a nosedive, plummeting by 85% to $6.7 billion in 2022. Mega oooof. 

Fast forward to the present, and they’ve seemed to come back to the table with a valuation hovering around $14-20 billion, depending on who you ask (and how optimistic they are). Meaning, for all the private placement folks who jumped in during the $45 billion hype, my condolences go out to you. 

(Source: Giphy) 

But hey, $14-$20 billion is definitely better than $6 billion, which is why they’re aiming for the U.S. to boost that appetite for more. For instance, Klarna has been pouring money into expanding stateside like there’s no tomorrow - and they’ve been growing their user base and fattening up revenues in the land of obesity and baseball, with U.S. sales jumping 38% in the first half of this year alone. Which is why, given the traction here in the degenerate U.S of A where millennials love debt disguised as quick convenience - a U.S. IPO is the next logical step for Klarna. 

(Source: Market Watch) 

On the other hand though, Europe isn’t taking this well, as they are feeling ghosted by one of their own. Now of course, Klarna’s CEO, Sebastian Siemiatkowski, has flirted with the idea of a European listing in the past, even name-dropping London. But in the end, the U.S. just has that certain je ne sais quoi. Maybe it’s the lighter regulatory touch (compared to Europe that is), or maybe it’s the allure of tech giants like Google and Apple. Either way, Siemiatkowski is betting big on the U.S. as Klarna’s new home.

But, but, but…. While some analysts are scratching their heads wondering if “buy now, pay later” is still a thing or just a 2020 relic - according to Klarna, it’s still the hip thing amongst the masses. And I for one, have to agree. 

(Source: Giphy) 

You see, the world (especially the US) has been dealt with raging inflation and soul-crushing rates over the past few years as it has left most Americans feeling a pinch every time they reach for their wallets. Whereas, given that the US credit card debt is floating around “We’re f**ked” levels - buying on loans is just the nature of our spending habits. 

(Source: Giphy) 

Which is why even though competitors like Affirm have already gone public (with mixed results), Klarna is hoping they can avoid the same fate by timing their IPO just right. Now obviously,  Klarna’s success hinges on more than just timing though. Especially since they’ve been slashing costs like a Black Friday sale—layoffs, AI-driven customer service, you name it. But contrary to the sentiment, it’s apparently working as Klarna reported a near $61 million profit for the first half of 2024, which is a nice recovery from last year’s losses. So maybe, just maybe, they’re onto something.

The takeaway here? Well, for starters, it’s clear that investors who got in at the $45 billion valuation aren’t seeing any of this as a win. But Klarna’s comeback story is still unfolding, and  while the $20 billion target might seem like a downgrade, it’s a far cry from the rock-bottom days of 2022. Plus, Klarna’s ability to turn a profit ahead of its IPO is a good sign that they’re not just slapping a new coat of paint on a sinking ship.

(Source: PYMTS) 

But, the real question is:  Will Klarna's U.S. IPO be the redemption arc they’re hoping for, or just another fintech flameout? Only time will tell.

In the meantime though, keep your head on the swivel as this story continues to unfold, especially if you’re an investor in competitors like Affirm. Meaning, place your bets accordingly and as always - stay safe and stay frosty, friends! Until next time...

P.S. Life comes at you fast friends, and while your favorite online stock guru is out here struggling to make heads or tails on the markets short-term direction - our team and our premium members at Stocks.News are absolutely CRUSHING it. How so? Well it all comes down to back-to-back-to-back-to-back-to-back massive wins over the last few weeks. Don’t believe me? Click here to see for yourself once we drop our next alert. 

Stocks.News holds positions in Apple and Google as mentioned in the article.