Klarna, the Swedish fintech giant also well known for its buy now, pay later fame, had a jaw-dropping IPO on the New York Stock Exchange. The company’s shares opened at $52, soaring 30% above their initial offering price. The company priced its IPO at $40 per share. This change would ultimately result in ~ $1.37 billion of liquid capital to Klarnas and its existing shareholders. This pricing was well above expectations and would value the company at close to $15 billion.
This IPO represents a pivotal moment for Klarna, which has been increasing its presence in the banking industry. The company expanded into the U.S. earlier this year, debuting a digital U.S. debit card and personal deposit accounts. This strategic shift will help it broaden its array of financial services. Instead, Klarna has only enrolled about 700,000 card customers in the U.S. As it stands, 5 million others are on a waiting list, eager to get their hands on these new products!
Klarna’s Sebastian Siemiatkowski hailed the IPO as a “milestone.” He likened the process to a wedding, stating, “It’s a little bit like a wedding. You prepare so much and you plan for it and it’s a big party. But in the end — marriage goes on.”
The backdrop was Klarna’s own experience as it first laid roots across Europe. The company reached runaway success through giving consumers flexible payment options that have risen in mainstream popularity. As it tumbles down the slippery slope into banking, Klarna might be headed for a nasty regulatory surprise. Meanwhile, across the pond in the U.K., the government has made moves to regulate buy now, pay later loans. They are listening to rising public outcry over skyrocketing costs.
The IPO is set to bring massive windfalls to early investors. Sequoia Capital, its first investor back in 2010, has gorged $500 million in the firm. Immediately after the IPO, Sequoia sold 2 million of its 79 million shares. That sold admission across all tiers yielded an outstanding inflation-adjusted return of approximately $2.65 billion against the initial offer price.
Current shareholders played an important role in getting this deal done, providing 28.8 million shares to the public market with this IPO. Japan’s SoftBank led that round in March 2021 at a valuation of $46 billion. The value of SoftBank’s stake has dropped precipitously since then.
As Klarna now embarks on this new chapter as a publicly traded company, Andrew Reed from Sequoia reflected on its achievements over the years: “Being here in New York 15 years later with over 100 million consumers and over $100 billion of GMV [gross merchandise value] and close to a million merchants, it is staggering what one year after another of execution and growth and Sebastian’s long-term vision can do.”