Shares of Swedish buy-now-pay-later firm Klarna Group Plc fell below their initial public offering (IPO) price for the first time on Friday, just weeks after the company’s highly anticipated debut.
The digital-payments firm’s stock dropped as much as 7.7% to $38.31, below the $40 IPO price, amid broader weakness in the fintech sector and investor concerns over interest-rate developments.
Klarna began trading on September 10 after raising about $1.58 billion from the IPO, which was double-digit oversubscribed and priced above the marketed range.
The stock initially opened at $52 and rose 15% on its first day, highlighting strong market demand.
However, the recent sell-off has erased much of that early enthusiasm, with shares retreating nearly 15% from their debut closing price.
Fintech peers also under pressure
Klarna’s decline is part of a broader pullback in high-growth fintech stocks.
Peer companies Affirm Holdings Inc. and Block Inc. also saw their shares fall on Friday, down 1.4% and 0.5% respectively, as both extended losing streaks for the week.
Affirm is on track for a five-day drop, while Block could fall for a fourth straight day.
Diksha Gera, a Bloomberg Intelligence analyst, noted that “fintech stocks, including Klarna, are sensitive to macroeconomic factors like interest rates and regulatory developments. Although the Fed started cutting rates in 2025, any hint of slower-than-expected cuts or yields rising could pressure valuations and sentiment as higher yields can increase their borrowing costs.”
The recent weakness comes after a strong rally in US technology stocks paused this week following better-than-expected economic data, which raised questions about the outlook for further Federal Reserve interest-rate cuts.
Rising yields can increase borrowing costs for fast-growing firms, a particular concern for fintech companies that rely on low-cost capital to finance consumer lending products.
Competitive landscape and market pressures
Klarna is also facing intensified competition from private fintech rivals that continue to command strong valuations.
Stripe Inc.’s valuation recently reached $106.7 billion, while Revolut Ltd. is pursuing a $75 billion valuation.
European peer Checkout.com announced a $12 billion valuation through a tender offer for employees.
Klarna has expanded its “fair financing” product, allowing customers to pay off larger purchases over extended periods.
While this has boosted net interest income, the company must also book larger provisions for potential credit losses on longer-term loans, adding pressure to results.
The company’s IPO spotlighted the growing popularity of installment plans among US shoppers, but market enthusiasm has cooled amid concerns over interest rates, competitive pressures, and regulatory scrutiny.
Even internal commentary underscores the challenge: Klarna CEO Sebastian Siemiatkowski was reportedly told by Chairman Michael Moritz on the day of the IPO that the firm was “10 years behind Revolut.”
Investors will be watching closely to see whether Klarna can regain momentum in a sector increasingly influenced by macroeconomic conditions and rising competition.
The stock’s recent decline illustrates the sensitivity of high-growth fintech companies to shifts in market sentiment and interest-rate expectations.
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