Shares of Klarna, a buy-now, pay-later lender, experienced a significant increase on their first day of public trading in the United States. The company achieved a market valuation exceeding $19 billion. Founded in 2005, Klarna allows consumers to pay for purchases in smaller, interest-free installments, and has gained popularity, boasting around 93 million active users across 26 countries.
Despite its success, Klarna has faced scrutiny regarding the potential risks associated with its business model, including concerns that it may encourage consumers to spend beyond their financial means. The company processed transactions totaling $105 billion in the previous year, establishing itself as a major player in the global shopping market since its entry into the UK in 2014 and the US in 2019. In Sweden, where the company originated, over 80% of adults utilized its services last year.
In its initial public offering (IPO), Klarna raised $1.37 billion by selling shares at $40 each. The shares opened at $52, reflecting a 30% increase from their initial price, which had valued the company at $15 billion. However, the company’s current valuation remains below its peak of over $45 billion in 2021, a decline attributed to economic challenges and rising interest rates.
Klarna reported a revenue of $2.8 billion last year, marking a 24% increase, but faced allegations of lower profitability in the US due to higher transaction costs. The company incurred a loss of $52 million for the three months ending in June, compared to a $7 million loss the previous year.
Klarna had long intended to go public, with an earlier plan postponed due to market volatility. Current conditions in the US financial market, characterized by recovering share prices, have attracted other companies, including crypto firms, also seeking public offerings.
Source: https://www.bbc.com/news/articles/c749ee2kpvgo?at_medium=RSS&at_campaign=rss