Global digital bank and buy now, pay later (BNPL) firm Klarna is positioned for substantial growth, according to Morningstar equity analyst Niklas Kammer. Klarna recently debuted on the market, rising 15 per cent on Thursday after the company and its backers raised $US1.37 billion through an initial public offering. The successful IPO indicates ongoing strength in the market for new listings. Klarna aims to provide innovative payment and shopping solutions, offering consumers flexible payment options and a seamless shopping experience. They also provide merchants with tools to enhance customer engagement and drive sales growth.
Kammer projects Klarna to achieve a 30 per cent operating profit margin by 2034. He also anticipates earnings per share to increase by 30 per cent annually starting in 2025. These projections suggest that Klarna has the potential to become a consistently profitable player among global fintech companies.
“Growth is what it is all about for Klarna. While its platform is currently just breaking even, starting to eke out a marginal operating profit, the company is poised for a big shift,” Kammer stated following the company’s trading debut. He believes that as Klarna’s platform expands and its underwriting models become more sophisticated, profitability is expected to improve significantly.
Kammer further explained that new payment service provider agreements will allow Klarna to promote its conversion and customer acquisition tools to merchants. This strategic move is expected to help Klarna reach more merchants, serve a larger customer base, and achieve more profitable growth in the long term.
