Will Klarna SPAC or IPO in 2025?

Yahoo

18 hours ago

Key Points
Klarna, which offers buy now, pay later plans, has seen impressive growth in its revenue and customer base.
It paused plans to go public in April after the Trump administration announced sweeping import tariffs.
An IPO could still happen this year, but Klarna stock will likely be volatile, especially in the early going.
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Investors have been eagerly waiting Klarna's public listing. The Swedish fintech company, most famous for offering buy now, pay later (BNPL) services, has about 100 million active consumers across 26 countries.
Klarna was close to becoming a publicly traded company earlier this year until the Trump administration announced import tariffs on "Liberation Day." If you're wondering whether you'll be able to invest in Klarna in 2025, here's what's known.
Klarna's IPO is on hold
Klarna filed its prospectus for an initial public offering (IPO) in March of this year and planned to go public in April. Those plans changed at the last minute after President Trump announced sweeping import tariffs. Due to the economic uncertainty and the stock market sell-off, Klarna paused its IPO.
Klarna hasn't announced a new IPO date yet and is reportedly planning to wait until after the summer, according to a report from Dagens Industri, a Swedish financial newspaper. However, management hasn't confirmed that timeline.
The way Klarna will go public is confirmed; it will hold a traditional IPO. It won't use a special purpose acquisition company (SPAC), a shell company that goes public and then seeks out a merger with a private company. While SPAC IPOs have been growing in popularity, Klarna ruled out that option years ago.
Will Klarna be a good investment opportunity?
Klarna has been successful as a BNPL company -- it's the fourth largest in terms of U.S. users, according to Statista -- but it faces concerns about its business model and financial losses.
BNPL companies are heavily reliant on the economy and interest rates. When the economy is strong, consumers are more willing to finance discretionary purchases through services like Klarna. During downturns, people tighten up their spending. Interest rates also impact BNPL companies by increasing their funding costs, especially since these companies normally offer interest-free plans.
Klarna's revenue has been steadily growing, jumping 24% to $2.8 billion in 2024. Net profit was $21 million, a 109% improvement from 2023, when the company posted a net loss of $244 million. However, it was only profitable because of a net gain of $171 million related to its sale of Klarna Checkout. Klarna was back to losing money in 2025's first quarter, with a net loss of $99 million, a 110% year-over-year increase.
That said, you could make a compelling bull case for Klarna. Its customer base is growing rapidly (18% year over year as of Q1 2025), and so is the number of merchants who accept Klarna (up 27% year over year). Klarna is also expanding its offerings. Last month, Klarna and Visa (NYSE: V) launched a debit card that lets cardholders pay in full upfront or use pay later options, and Klarna announced it's launching wireless service plans, like fellow fintech companies Revolut and Nubank have done.
Another area in which Klarna has shown promise is the incorporation of artificial intelligence (AI) technology. It started a collaboration with OpenAI in 2023 to incorporate Klarna shopping results into ChatGPT answers. Klarna has also leveraged AI to cut costs. It estimates that AI is responsible for about $10 million per year in savings on sales and marketing spending.
Klarna will likely go public in the near future
Investors probably won't need to wait too much longer for Klarna to be available on the stock market. Polymarket, a prediction platform, currently has the odds of a 2025 Klarna IPO at 75%. There have also been several successful IPOs since the stock market turmoil in April, including Circle (NYSE: CRCL) and Chime (NASDAQ: CHYM), which could convince Klarna's management to take the plunge.
Stocks can be volatile in the early days, so even when Klarna goes public, you may want to exercise patience before buying any shares. For a potential point of comparison, investors can look at Affirm (NASDAQ: AFRM), a BNPL company that completed its IPO in 2021. In its first year on the market, it went through several wild price swings. It's currently (as of July 23) 61% off the all-time high it reached in November 2021.
IPO stocks can be good long-term investments, but the hype surrounding them sometimes leads to overvaluations. If you're thinking about investing in Klarna, estimate a fair price for it before the IPO and use that to decide whether to buy early or wait for the initial hysteria to wear off.
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Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Visa. The Motley Fool has a disclosure policy.
Will Klarna SPAC or IPO in 2025? was originally published by The Motley Fool