Klarna’s $15 Billion IPO: A High-Stakes Gamble in the BNPL Market

Feb 17

4 min read

Swedish fintech giant Klarna is making a bold move into the public markets, officially planning an April 5, 2025, initial public offering (IPO). With a target valuation of $15 billion, Klarna is expected to be one of the largest IPOs of the year, solidifying its position as a major force in the Buy Now, Pay Later (BNPL) space. However, despite its massive scale—processing over $100 billion in transactions annually and serving 85 million users—the company faces a mix of optimism and skepticism.

Unlike traditional credit cards, Klarna’s "Pay in 4" model offers consumers interest-free installment plans, a feature that has driven its popularity, especially among younger shoppers. Yet Klarna's business model relies heavily on merchant transaction fees, which account for 85% of its revenue. The upcoming IPO marks a pivotal moment for the company, but questions remain: Is Klarna ready to go public? Can it sustain long-term profitability? And how will its last-minute pivot toward crypto impact its market prospects?

Klarna’s Journey: From Hyper-Growth to Reality Check

Founded in 2005, Klarna rode the e-commerce boom to become a dominant BNPL player. However, like many fintech companies, Klarna experienced a brutal market correction in recent years. At its peak in 2021, Klarna was valued at $45.6 billion, making it one of Europe’s most valuable startups. But by mid-2022, its valuation had collapsed to $6.7 billion, reflecting the broader downturn in fintech investments amid inflation concerns, rising interest rates, and regulatory uncertainty.

Despite this, Klarna rebounded in 2023 and 2024, fueled by a 16% increase in gross merchandise value and a 33% revenue surge in the U.S. The company also made a major push into the American market, where profitability was a key goal before going public. Klarna now claims that the U.S. is its fastest-growing region, a critical factor in its IPO timing.

Even so, Klarna is not yet fully profitable on a global scale. While BNPL continues to grow—56% of shoppers use installment options yearly, and 9% of Americans use BNPL services—rising competition and potential regulatory challenges could slow down Klarna’s momentum.

Crypto Ambitions: A Game-Changer or a Regulatory Nightmare?

Just as Klarna prepares for its IPO, CEO Sebastian Siemiatkowski made a surprising announcement on X (formerly Twitter): Klarna is actively exploring crypto payment implementation. While details remain unclear, the timing raises questions—is Klarna genuinely committed to crypto, or is this a strategic play to attract investor interest before going public?

If Klarna integrates crypto payments, it could broaden its appeal to younger, tech-savvy consumers and potentially diversify its revenue streams. However, the regulatory landscape for crypto remains uncertain and highly scrutinized, especially in Klarna’s key markets like the U.S. and the European Union. The SEC and EU regulators have both been cracking down on fintech firms that operate in the crypto space, and Klarna could face additional compliance challenges.

It is also unclear whether Klarna will support direct crypto payments, stablecoins, or blockchain-based BNPL financing—each of which carries its own risks and potential rewards. Will Klarna's crypto ambitions be a bold innovation or an unnecessary distraction?

Competition & Market Challenges

While Klarna is a dominant BNPL player, it operates in an increasingly competitive and evolving market. Major rivals include:

Affirm (AFRM) – A U.S.-based BNPL company that went public in 2021 but has struggled with profitability.
Block (SQ) (formerly Square) – The fintech giant, led by Jack Dorsey, owns Afterpay, a major BNPL competitor.
PayPal (PYPL) – A household name in digital payments that has aggressively expanded its BNPL offerings.

The BNPL industry itself is facing more scrutiny, as regulators worry about consumer debt risks and the long-term sustainability of zero-interest financing models. As Klarna prepares to go public, it will need to prove that BNPL is more than just a post-pandemic trend.

Additionally, Klarna has not yet confirmed which stock exchange it will list on, though speculation suggests it may pursue listings outside the U.S. in addition to its primary IPO.

The Road to Klarna’s IPO: Key Takeaways

Klarna’s April 5, 2025, IPO is set to be one of the biggest fintech public offerings of the year, with a $15 billion valuation target.
Despite major growth, Klarna is not yet fully profitable—though its U.S. operations have turned a profit.
Klarna is exploring crypto payment implementation, but it could face significant regulatory hurdles.
Klarna’s core BNPL business is thriving, but it faces rising competition from Affirm, PayPal, and Block.
The BNPL market is expected to grow at a 20% CAGR, but regulatory challenges and consumer debt concerns remain key risks.

Final Thoughts: Will Klarna’s IPO Succeed?

Klarna is positioning itself as a global fintech leader, but its IPO carries significant uncertainties. With profitability concerns, competitive pressures, and crypto ambitions, investors will need to weigh the risks carefully. Klarna’s success will depend on whether it can sustain its BNPL dominance, expand profitably, and navigate regulatory challenges in both fintech and crypto.

One thing is certain—Klarna’s IPO will be a defining moment for the future of Buy Now, Pay Later.