Klarna Shares Close Up 15% in Trading Debut After $1.37B IPO

Bloomberg's Bailey Lipschultz breaks down the first hours of trading for payments company Klarna, which allows users to buy goods and pay in installments.

The company's IPO jumped 30% in its trading debut.

Klarna Group Plc shares jumped 30% in their opening trade, after the company and some of its backers raised $1.37 billion in an initial public offering that signals the market for new listings has room to run.

The company’s shares opened at $52 each in New York, above the IPO price of $40 apiece, after a first-time share sale that left about half of the prospective investors placing orders empty handed. The double-digit oversubscribed offering priced on Tuesday above the marketed range.

The trading values the company at nearly $20 billion, based on the outstanding shares. Though stock options and warrants add a bit to that valuation, it’s a steep drop from the $45.6 billion figure reached in 2021, at the height of the Covid 19-fueled online shopping bonanza.

A private funding round the following year sent the valuation plunging to $6.7 billion, as a cocktail of inflation and higher interest rates put pressure on fintech business models around the world, including Klarna’s position as a provider of so-called buy-now, pay-later financing.

To Klarna Chief Executive Officer Sebastian Siemiatkowski, the IPO cements the evolution of Klarna’s business beyond its roots in buy-now, pay-later. The firm, which rose to prominence during the pandemic-era jump in e-commerce, has more recently been making a push into offering other banking products like savings, checking accounts and credit cards.

“Investors finally were asking very few questions about buy now, pay later, which was very nice to see the message and the success of Klarna coming across,” Siemiatkowski said in an interview. “That this isn’t just buy now, pay later. That we offer all types of payment methods and that we offer the card and all types of retail, banking, financial services.”

Founded in Stockholm, the company has been expanding its offering of its “fair financing” product, which allows customers to pay off larger-ticket items over a longer period of time. While that’s provided a boon in net interest income, the push has also weighed on results because Klarna is required to book larger provisions for potential credit losses on these longer-term loans.

For now, such loans amount to about 2% of Klarna’s total transactions, an earlier filing with the US Securities and Exchange Commission showed. The company expects that share to grow after the number of merchants offering the fair financing loans doubled in the last two years.

Klarna has spent the better part of the last year preparing for its public debut. As the firm readied its listing earlier this year, though, it was thrown into disarray as markets went haywire amid US President Donald Trump’s tariff announcements.

Siemiatkowski hit pause on the offering before bringing it back to life in recent weeks. He said one of his favorite memories from the roadshow was when a staffer of one of his investors approached him about getting a credit card from the fintech.

“The guy at the security says, ‘Oh, you’re from Klarna,”’ the 43-year-old CEO recalled. “And he’s like, ‘I wanna get the card. I’m on the waiting list. Just get me the card.’ So I think that was probably the height of the whole thing.”

IPO Market Heating Up

The listing comes as the US IPO market is heating up, with shares of companies including Circle Internet Group Inc. and Figma Inc. surging in their attention-grabbing market debuts. With Klarna’s listing, first-time share sales have raised $25.7 billion this year, excluding closed-end funds and other financial vehicles, above the $20.4 billion raised in the same period in 2024, according to data compiled by Bloomberg.

Along with Klarna, Gemini Space Station Inc., the crypto exchange led by the billionaire Winklevoss twins, Blackstone Inc.-backed engineering firm Legence Corp. and Black Rock Coffee Bar Inc. are among those pricing their IPOs this week.

--------

Watch Bloomberg Radio LIVE on YouTube

Weekdays 7am-6pm ET

Follow us on X

Subscribe to our Podcasts:

Bloomberg Daybreak

Bloomberg Surveillance

Bloomberg Intelligence

Balance of Power

Bloomberg Businessweek

Listen on Apple CarPlay and Android Auto with the Bloomberg Business app:

Apple CarPlay

Android Auto

Visit our YouTube channels:

Bloomberg Podcasts

Bloomberg Television

Bloomberg Originals