Klarna, the Swedish buy-now-pay-later giant, hit Wall Street this week with the largest U.S. IPO of 2025 so far, raising $1.37 billion in a deal that was oversubscribed nearly tenfold. Shares were priced at $40, above the expected $35 to $37 range, giving the company a $15 billion valuation. They opened 30% higher at $52 before settling near $46, leaving Klarna with a market cap of about $17 billion.
It was a defining moment for a company that once soared to a $45 billion valuation at the peak of the fintech boom, only to crash to $6 billion in the tightening cycle of 2022. For CEO and co-founder Sebastian Siemiatkowski, the IPO wasn’t just about money. “Going public in New York is huge. It’s not just a milestone; it’s a statement,” he told employees. “It’s proof that a bunch of stubborn dreamers from Stockholm can take on the world and win.”
The IPO Mechanics
The headline numbers obscure a key fact: most of the IPO proceeds didn’t go to Klarna. Of the 34.3 million shares sold, only 5 million were primary, raising about $200 million for the company. The rest came from long-time investors, including Sequoia Capital, Silver Lake, BlackRock, and Anders Holch Povlsen.
Sequoia remains Klarna’s largest shareholder, holding nearly 23%. Michael Moritz, who cut Klarna’s first Sequoia check in 2010, shepherded the firm’s role as board chair until 2023, when Andrew Reed stepped in. Siemiatkowski himself sold no shares, retaining a 7.5% stake worth more than $1 billion. Former co-founder Victor Jacobsson cashed out 1.1 million shares but still holds more than 8%. Niklas Adalberth, the third co-founder, remains just under 3 million shares.
The structure mirrored Figma’s IPO earlier this year: existing investors pushed more stock into the float to attract big institutions. “Floating more shares helps the IPO attract the biggest institutional investors who wouldn’t bother with a small allocation,” a VC explained. But as CNBC’s Jim Cramer put it, Klarna’s deal was “more exit liquidity for venture capitalists” than growth capital.
From Stockholm to Wall Street
Founded in 2005, Klarna started as a simple payments company before pivoting. A decade ago, it was competing with Stripe and losing. “We realized they were beating the shit out of us,” Siemiatkowski admitted on a podcast with TBPN. By 2015, Klarna refocused on consumers, betting that the future of finance would be digital assistance.
That gamble paid off. In Europe, Klarna became more than a BNPL service — it was a PayPal-style wallet used across categories. In the U.S., it partnered with Macy’s, Sephora, and Walmart. Its “pay-in-4” six-week installment plan became the company’s calling card. Today, Klarna has 111 million users across 26 countries, handling $105 billion in transactions last year. In Sweden, more than 80% of adults used the service.
The U.S. remains the centerpiece. “It’s the largest consumer market in the world, and it’s the biggest credit card market in the world,” Siemiatkowski told the Associated Press. “It’s a tremendous opportunity.”
For Siemiatkowski, the IPO was decades in the making. On TBPN, he revealed that Google’s 2004 listing was the template. “You have a globally successful company that’s profitable, but it’s simple IPOs, and has so many years of growth ahead. That’s the time you want to do it.” Klarna waited until it was global and profitable before pulling the trigger.
“We think we have decades of growth ahead of ourselves,” he said. “Now we’re starting to get ready.”
The Financial Assistant Ambition
The long-term plan is not just installments. Klarna wants to evolve into what Siemiatkowski calls a “digital financial assistant”, a tool that manages consumer finances proactively. “Imagine a service that wakes you up and says, ‘I analyzed your mortgage, I can save you 20 bucks, just say yes and I’ll do all the paperwork,’” he explained.
Early moves hint at that direction. Klarna’s U.S. card drew 700,000 signups in six weeks with 5 million on the waitlist. Deals with Walmart are structured as co-branded offerings, echoing how Amex partners with airlines. Klarna also supports subscription payments with Disney+, Spotify, Uber, and DoorDash, helping merchants lower transaction costs. “Payments cost is a huge issue,” Siemiatkowski said. “We help them drive it down.”
The AI Efficiency Experiment
Perhaps the most controversial piece of Klarna’s story is how aggressively it has embraced AI to cut costs. Over two years, the company shrank from 7,400 employees to 3,000, largely through attrition, while ripping out 1,200 SaaS tools. Salesforce alone cost $2 million in annual licenses; Klarna built its own CX software directly with OpenAI.
The result: revenue climbing while operating expenses shrink. “Investors were shocked,” Siemiatkowski admitted. “How come you’re growing revenue so much and your OPEX is coming down? It’s the opposite of what you’re supposed to see.”
Managers now use tools like Cursor for coding and data analysis. “We may have over-indexed on productivity,” Siemiatkowski conceded, “but the less of a mess, the easier it is, both for human and AI, to use productively.” He was blunt about the labor impact: “Unfortunately for human labor, we don’t feel we need more people.”
Numbers and Risk
Klarna posted $823 million in Q2 revenue and an adjusted profit of $29 million before its IPO. But profitability remains uneven. The company reported a $52 million loss in the three months to June, up from $7 million a year earlier. Its 20% growth rate and slim 3% network margins trail Affirm’s 33% growth and 8% margins. Klarna’s average order size is $101, compared to Affirm’s $276.
Delinquency rates remain low at 0.89% for short-term BNPL, 2.23% for longer-term loans which is below credit card averages. Klarna insists its average balance per user, under $100, keeps risks manageable. Still, regulators in the U.S. and Europe have flagged BNPL as a potential debt trap.
Pop Now, Poops Later?
Investors are divided. GP Bullhound partner Joachim Dal defended Klarna as “more of a payments company than a lender,” pointing to “very low” late-payment rates. Cramer, meanwhile, called Klarna a buy on day one, praising its “impressive underwriting standards” and diversified revenue streams, from transaction fees to advertising.
But skeptics were louder. A Dubai-based market veteran wrote that Klarna’s IPO was “pop now and poops later,” comparing it to Chime and CoreWeave. “Affirm is profitable, has a higher growth rate, and is as All-American as Mom and Apple Pie,” he wrote. “If you buy Klarna tonight at max hype, you will pay later.”
The macro environment adds to the risk. Inflation remains above 3%, and recession fears loom in the U.S. and Europe. “When the music stops for Wall Street, how do you separate the men from the boys in the fintech universe? Answer, with a sledgehammer,” the investor warned.
For Siemiatkowski, the IPO is more of a checkpoint. He recalled finding an old email he sent to his co-founders five months after founding Klarna: “What if we expand this beyond Sweden, become global, go after the banks?” Two decades later, he was standing at Walmart’s headquarters in Bentonville at the grave of Sam Walton, about to sign a deal with the world’s largest retailer.
“I’ve only been doing this for two decades,” he told TBPN. “Come on guys, it’s just getting started.”
Whether Klarna’s AI-fueled efficiency and financial-assistant vision can sustain public-market scrutiny remains to be seen. For now, Wall Street has embraced the Stockholm fintech with open arms. But as one critic put it, “In a world where even Amazon once lost 90% of its market value, why can’t I buy KLAR at $8–$10 this winter in a post-bubble clearance sale?”
