Klarna has confidentially filed for an initial public offering (IPO) with the United States Securities and Exchange Commission (SEC).
The fintech company, widely recognized for its buy now, pay later (BNPL) services, has not disclosed the valuation it is seeking.
However, analysts estimate its worth at approximately $14.6 billion.
Notable investors in Klarna include SoftBank, Sequoia Capital, and Atomico.
Klarna could disrupt the banking industry
Klarna could be a promising investment for early backers, given that it has already achieved gross profitability in the US.
The company is experiencing rapid growth, with its revenue increasing by 27% year-over-year to $1.21 billion in the first half of 2024.
Currently, Klarna has over 30 million users in the US, but CEO Sebastian Siemiatkowski remains optimistic about global growth potential.
In a recent interview with CNBC, he highlighted the company’s AI-powered financial services as a potential disruptor to the traditional banking industry.
Executive confidence, like that shown by Siemiatkowski, is often seen as a positive signal, as company leaders typically possess extensive knowledge of their business and the industry landscape.
Klarna is expanding in the debit space
Klarna’s mission is to offer “better, healthier, interest-free credit options” to consumers worldwide.
The company is also expanding its presence in the debit space, with 30% of its current transaction volume being debit-based.
Recently, Klarna introduced features allowing users to store money in their accounts, with interest rates exceeding 3.5% in Europe.
The company has plans to roll out similar services in the US.
Investing in Klarna’s IPO may also be attractive due to the widespread adoption of its services; over half of the top 100 US retailers now offer Klarna’s BNPL options.
According to Siemiatkowski, “US debt is extremely expensive for retailers. In Europe, we’re talking about 20-30 basis points, while in the US, it’s 150 basis points. This presents a significant opportunity for a company accustomed to a cost-conscious environment.”
Rival Affirm has done well in recent months
It is noteworthy that Klarna added 68,000 new merchant partners in the first half of 2024 and is utilizing artificial intelligence to reduce costs and advance its next-generation commerce network.
According to a recent earnings release, “Klarna has successfully recouped its investment in the US market after just five years, demonstrating the scalability of its network.”
Rival company Affirm has shown strong performance, with its stock trading at $55 per share compared to $24 in early August.
Affirm’s recent success indicates sustained demand for BNPL services, which could bode well for Klarna’s long-term prospects as it approaches its IPO.
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