Buy now, pay later lender Klarna files for U.S. IPO

Klarna, a provider of buy now, pay later loans filed its IPO prospectus on Friday, and plans to go public on the New York Stock Exchange under ticker symbol KLAR.

Klarna, headquartered in Sweden, hasn’t yet disclosed the number of shares to be offered or the expected price range.

The decision to go public in the U.S. deals a significant blow to European stock exchanges, which have struggled to retain homegrown tech companies. Klarna CEO Sebastian Siemiatkowski had hinted for years that a U.S. listing was more likely, citing better visibility and regulatory advantages.

Klarna is continuing to rebuild after a dramatic downturn. Once a pandemic-era darling valued at $46 billion in a SoftBank-led funding round, Klarna saw its valuation slashed by 85% in 2022, plummeting to $6.7 billion in its most recent primary fundraising. However, analysts now estimate the company’s valuation in the $15 billion range, bolstered by its return to profitability in 2023.

Revenue last year increased 24% to $2.8 billion. The company’s operating loss was $121 million for the year, and adjusted operating profit was $181 million, swinging from a loss of $49 million a year earlier.

Klarna is the latest upstart to file for a U.S. IPO as tech companies look to hit the public market following a historically slow stretch for new offerings. Earlier this month, CoreWeave, a provider of cloud-based Nvidia processors to companies including Meta and Microsoft, filed its prospectus.

Cloud software vendor ServiceTitan hit the market in December, marking the first significant venture-backed tech IPO since Rubrik’s debut in April. A month before that, Reddit started trading on the NYSE. There haven’t been many other tech IPOs of note in the U.S. since late 2021, when rising interest rates and soaring inflation pushed investors out of risky assets.

Market volatility could still get in the way of Klarna’s plans. The Nasdaq just wrapped up its fourth straight week of losses, closing on Thursday at its lowest level since September before rebounding a bit on Friday.

Data released Friday from the University of Michigan confirmed that consumer confidence has suffered from the ongoing tariff-related uncertainty that’s underpinned the opening weeks of the second Trump administration. Consumer sentiment dropped in March to 57.9, lower than the 63.2 economists polled by Dow Jones had expected.

Founded in 2005, Klarna is best known for its buy now, pay later model, a service that allows consumers to split purchases into installments. The company competes with Affirm, which went public in 2021, and Afterpay, which Block acquired for $29 billion in early 2022. Klarna’s major shareholders include venture firms Sequoia Capital and Atomico, as well as SoftBank’s Vision Fund.

Klarna also names major banks like JPMorgan Chase, Citigroup and Bank of America as competitors as well as traditional credit card networks, including Visa and Mastercard, and “digital-focused banks” like Revolut and Nubank.

Klarna has operated as a fully licensed bank in Europe since 2017, according to the filing. Siemiatkowski told CNBC in December that the company is aiming to get a license in the U.S., where it currently partners with WebBank.

“We want to accelerate our money transmitting licenses,” Siemiatkowski said, adding that the company is willing to invest $1 billion in that effort. Klarna wants to “go after these horrendous credit card fees that American consumers are used to paying,” he said.

Block on Thursday said it secured approval from the Federal Deposit Insurance Corporation to originate loans through its banking subsidiary, Square Financial Services, allowing it to offer small-dollar consumer loans directly rather than relying on external banking partners. It’s an expansion of Cash App Borrow, the company’s short-term lending product.

Block, Affirm and PayPal are each bolstering their portfolios of financial products, including debit, lending and payment offerings, as they try to capture more consumer attention and spending. Klarna will have to compete on price, with attractive rates and incentives, to keep up with the competition.

WATCH: Klarna CEO on state of consumer