Klarna’s upcoming initial public offering (IPO) is experiencing significant investor demand. Orders for the Swedish buy-now-pay-later (BNPL) lender’s shares have surged, driven partly by its implied market valuation, which is about half that of its competitor, Affirm Holdings. Klarna is a payments company that allows customers to make purchases and pay for them in installments. The company facilitates transactions between consumers and retailers, offering flexible payment options.
The offering of 34.3 million shares, predominantly from early investors, has reportedly attracted orders exceeding eight times the available allocation. This robust demand has led the banking syndicate managing the IPO to suggest that the final pricing could be at the upper end of the initial marketing range of $US37 or potentially even higher.
The IPO occurs amidst a renewed positive sentiment surrounding fintech stocks, fuelled by anticipated interest-rate cuts in the US and potentially more favourable regulatory conditions from Washington. However, even with the strong interest, the IPO terms value Klarna at approximately $14 billion, considerably lower than Affirm’s market capitalisation of over $28 billion. This valuation gap is seen by some as an attractive opportunity for investors seeking growth potential in the equity market.
Rohit Kulkarni, a senior research analyst at Roth Capital Markets, suggests that while Klarna may not warrant the same valuation multiple as Affirm in the immediate future, the current discount offers compelling value for investors participating in the IPO.
