Klarna Group PLC will make its Wall Street debut on Wednesday with strong investor appetite driving its initial public offering (IPO) above expectations.
The financial-technology company priced its shares at $40 each late Tuesday, higher than the projected range of $35 to $37.
With roughly 34.3 million shares sold, Klarna raised about $1.37 billion in fresh capital, valuing the company at approximately $15.1 billion based on 378 million outstanding shares.
The stock will begin trading on Wednesday on the New York Stock Exchange under the ticker symbol “KLAR.”
The successful pricing comes at a time when companies with strong name recognition have been well-received in the IPO market.
Recent debuts, including Figma Inc. and Circle Internet Group Inc., saw their shares rise significantly in early trading.
While both stocks later retreated from their peaks, their performance underscored renewed interest in IPOs after a subdued period.
Other fintech peers IPO
Klarna’s listing invites comparisons to Affirm Holdings Inc., another major player in the buy-now-pay-later (BNPL) space.
Affirm, which went public in early 2021, has experienced significant volatility since its debut.
Its shares currently trade at nearly half their pandemic-era peak but have regained momentum in recent months as profitability improved and new products gained traction.
Affirm’s market capitalization stands at about $29 billion.
Both Klarna and Affirm are competing to secure a deeper role in consumer financial habits, expanding beyond BNPL into offerings such as debit cards and other payment products.
The companies, however, differ in approach. Klarna emphasizes “pay in four” installment plans, while Affirm leans more heavily on interest-bearing products. Analysts say this has translated into a stronger profit profile for Affirm.
In the 12 months ending in June, Klarna generated $3.1 billion in revenue compared with Affirm’s $3.2 billion.
Despite similar top-line results, Klarna reported a net loss of $100 million, whereas Affirm posted $52 million in net income.
Mizuho analyst Dan Dolev highlighted the divergence in profitability, noting that Affirm’s business model has produced more favorable results to date.
Growth prospects and investor outlook
Klarna’s IPO prospectus emphasizes what management calls a “deliberate balance of growth and profitability,” particularly in its US expansion.
The company, founded in Sweden and now domiciled in the UK, had recorded 14 consecutive years of net income from 2005 through 2018 before international growth initiatives weighed on earnings.
Though not profitable under International Financial Reporting Standards (IFRS), Klarna points to its positive transaction margin, a metric in the payments industry that reflects revenue after transaction costs.
Chief Executive Sebastian Siemiatkowski underscored the company’s positioning as a consumer-friendly alternative to traditional banks, criticizing revolving-credit products that rely on late fees and penalties.
Morningstar analyst Niklas Kammer views the IPO pricing as conservative, assigning a fair value of $45 per share, which implies a 12.5% upside to the offer price.
Kammer noted that Klarna has laid a strong foundation ahead of its listing, citing recent partnerships with payment service providers that could materially expand the company’s reach in the coming years.
Looking ahead, Morningstar projects that profitability could improve significantly as Klarna scales and enhances its underwriting models, with expectations of a 30% operating margin by 2034.
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