[U.S. IPO] Klarna Eyes September IPO to Lead US Market Listing Wave

TradingKey - According to Reuters, Klarna, the Swedish fintech giant renowned for its "Buy Now, Pay Later" (BNPL) services, plans to relaunch its US initial public offering (IPO) in September. The pricing is set to be determined this week, with a range of $34-36 per share, aiming to raise nearly $1 billion. The target valuation for the IPO is between $13-14 billion, significantly lower than the nearly $50 billion valuation set in 2021 and earlier this year’s valuation of over $15 billion.

Klarna is an integrated fintech platform that combines payment solutions, consumer credit, and shopping services. Analysts assert that its core competitive advantage lies in offering BNPL payment solutions, which significantly enhance shopping flexibility and affordability, especially for high-priced items.

The company filed for listing with the SEC (Securities and Exchange Commission) in March this year but temporarily shelved plans due to market turbulence caused by tariffs announced by Trump in April. Back in 2021, Klarna also considered going public but opted out due to macroeconomic conditions affected by the tech industry downturn and geopolitical events, and subsequently experienced a significant valuation cut to approximately $6.7 billion in 2022.

On August 15, Klarna updated its filings with the SEC, including the latest financial results, indicating readiness to proceed with its listing plans.

Despite the company's IPO journey facing repeated obstacles, its impressive performance is undeniable. The prospectus reveals that Klarna's revenue has steadily increased over the past three years, with profitability improving, resulting in a turnaround to profitability, largely thanks to AI applications. In early 2024, Klarna launched an AI assistant supporting 35 languages, handling complex tasks in payments, shopping, refunds, and returns across 23 markets. Klarna indicates that this tool has saved the company roughly $39 million in costs during 2024.

Analysts believe that the current improvement in market liquidity will provide a favorable environment for the stock's listing. Inflationary pressures have eased compared to the same period last year, and there is a growing bet on interest rate cuts in the upcoming quarters. Analysts widely agree that if rate cuts materialize over the next four to six quarters, lowering consumer financing costs, it will benefit BNPL and payment penetration, which bodes well for the stock.

Furthermore, Klarna may spearhead the September US IPO wave. According to Bloomberg, 6 companies are slated to confirm their IPO pricing in the same period. Cryptocurrency exchange Gemini and blockchain finance company Figure have updated their IPO filings, while Blackstone-backed Legence Corp, beverage chain Black Rock Coffee Bar, and public transportation software company Via Transportation filed for IPOs in August. Bloomberg notes that if these 6 companies each set IPO prices in the second week of September, it will mark one of the densest periods of major IPO transactions since the IPO boom in late 2021.

Analysts suggest this IPO is seen as a crucial indicator for the US new stock market this year. If pricing and initial trading are stable, it could sustain the warming trend of the IPO window this year and enhance the market's appetite for risk on growth assets.