Klarna IPO: Everything you need to know

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Axi Team
Everything you need to know Klarna IPO

Talks about a potential Klarna IPO intensified in 2021, but nothing has materialized so far. Whether 2023 will be the year Klarna goes public is uncertain too.

A challenging market environment and a less-than-stellar financial performance in the last few quarters might inspire CEO Sebastian Siemiatkowski to postpone the IPO further. The news surrounding Klarna has been overwhelmingly negative recently – from layoffs to a sharp decrease in the company´s valuation. Nevertheless, Klarna is still growing fast and the interest from investors hasn´t diminished completely.

 

Klarna company stats

Founded 2005
Headquarters Stockholm, Sweden
Number of employees 6,000+
Revenue 2021 $1.42 billion
Stock Exchange -
Potential Valuation $6.7 billion

Source: TechCrunch

 

How does Klarna make money?

Klarna, founded in Sweden in 2005, is a fintech company that provides online financial services. Whilst the company has expanded rapidly, the headquarters remain in Stockholm and one of the co-founders (Sebastian Siemiatkowski) still serves as CEO.

Klarna is offering “buy now, pay later” payment options for online retailers and physical stores. This enables buyers to split their payments over four equal interest-free installments, which have to be paid every two weeks.

You are probably wondering, how does Klarna make money if there is no interest charge? The company generates revenues through merchant commissions and interchange fees.

Klarna also charges late fees for clients that have missed paying the due amount on time. The company also generates revenues from interest on credit products, which enables customers to purchase higher-value items in payment plans varying from 6 to 36 months.

Klarna´s popularity has jumped in recent years, with the company now boasting over 150 million customers worldwide.

There are concerns, however. “Buy now, pay later” is facing increased scrutiny from regulators who fear that this activity is not regulated enough and that consumers might accumulate a lot of debt without realizing it. Despite being interest-free, there obviously are consequences of not paying back what is owed - which range from late fees to a negative impact on the credit score and dealing with debt collectors.

Competition has intensified too - ranging from other fintech companies to traditional, well-established credit card issuers entering the space.

 

The IPO: When, where and what to expect

Klarna´s decision to postpone its IPO might have been a wise decision. Klarna´s main competitor Affirm Holdings went public in early 2021 and its share price has collapsed by 88 % since then.

What about Klarna´s financials?

The Swedish company has recently announced a SEK10.5 billion loss in 2022 (up from SEK6.6 billion). At least gross merchandise volume and revenue growth were up 22 % and 19 % respectively, implying Klarna is still growing fast.

Despite that, the company has struggled with soaring inflation and challenging economic conditions.

Klarna´s valuation recently took a major hit. While valued at $31 billion in March 2021, it saw its valuation drop to only $6.7 billion in July 2022.

Its popularity amongst consumers and strong position in key markets could help the company recover quickly though, and interest in its IPO could bounce back just as fast.

 

3 steps to trade Klarna IPO with Axi

An Initial Public Offering (IPO) is an investor’s first chance to gain exposure to an organisation. An IPO is an important milestone for a company looking to raise capital and an opportunity for investors to get involved in a hopefully growing business.

With Axi you can get exposure to Klarna IPO as soon as it’s listed on a specific exchange and prices from the exchange become available to our liquidity providers.

  1. Login to your live MT4 trading account (sign up with Axi if you don’t have one)
  2. Navigate to market watch, right-click, and select ‘show all’. Search for Klarna.
  3. Choose your position and size and go long or short on share prices. Don’t forget to set risk management tools like a stop loss and take profit order.

 

Sources: Bloomberg

 

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The data is sourced from third-party providers. This information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. It has been prepared without taking your objectives, financial situation, or needs into account. Any references to past performance and forecasts are not reliable indicators of future results. Axi makes no representation and assumes no liability regarding the accuracy and completeness of the content in this publication. Readers should seek their own advice.



Axi Team

Axi Team

The Axi team is full of people with decades of financial industry experience and knowledge of almost every aspect of trading. The Axi team blog, in addition to regular posts from our daily market analysis contributors, is a place to share wider insights and ideas. In this section, you’ll find posts about everything from forex education and helpful hints for new traders to product updates and important market announcements.


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