Klarna debuts on Wall Street for $19 billion

Salary lender Klarna’s U.S. stock rose to the first day of public trading in the U.S., with the company’s market value exceeding $19 billion (£14 billion).

It marks an important milestone for the Swedish lending giant, which became a challenger to credit cards and traditional banks.

The company was founded in 2005 and is known for allowing shoppers to pay in smaller, interest-free installments and proved to be popular with approximately 93 million active users in 26 countries.

However, the company faces ongoing problems with the risks that its business model may lead people to transcend the means.

Klarna handled $10.5 billion worth of deals last year. It is a major global player in the shopping field, entering the UK in 2014 and the US in 2019.

In its native Sweden, more than 80% of adults used the service last year, the company said.

CEO Sebastian Siemiatkowski said in his staff shared with the company that this moment would provide the company with “fuel” as it attempts to carry out similar abuses in other markets.

The company raised $1.37 billion in its initial public offering (IPO), selling shares at $40 per person with some long-term investors.

Stocks opened at $52, soaring 30% from IPO prices – an estimated $15 billion – over $19 billion.

However, the stock fell at the end of the day, reaching around $46 and setting the company’s value at $17 billion.

The company continued to trade at a discounted price compared to 2021, when an investment from SoftBank Group put the company worth more than $45 billion. The company was subsequently hit by a slowdown and rising interest rates.

Joachim Dal, a partner at GP Bullhound Investment Management, said he believes investors misunderstood Klarna, which is buying most of its funds by charging sellers for future payment services.

“We think it’s more like a payment company than a lender,” he said at the BBC opening show. “It’s more about promoting a smooth experience in payment than providing credit to consumers.”

Last year, Klarna reported revenue of $2.8 billion, up 24% year-on-year.

However, since entering the United States, its profitability has suffered as it faces higher transaction costs.

It reported that its loss was $52 million in the three months to June, up from $7mA before.

Krana has been following the public offering for years. Plans for debut in April were delayed after U.S. tariff announcements spread to financial markets.

But since then, U.S. stocks have recovered, with record highs in major index trading.

Several other companies, including cryptocurrency company Gemini, are planning this week’s public offerings, trying to take advantage of the favorable climate.

“For any company that wants to be open to technology, there is only one market, and that’s the market for Wall Street,” Dahl said.

“That’s where you have the most liquidity, most of the stock analysts have coverage for most comparable companies you list and frankly, you get the highest valuations as well.”