Klarna Sets Sights on September IPO Amidst Shrinking Valuation and Financial Pressures

Klarna, the Swedish buy-now-pay-later giant, is preparing to relaunch its U.S. initial public offering (IPO) in September, targeting a valuation between $13 billion and $14 billion, according to sources familiar with the matter. This strategic move comes after the company postponed its IPO plans earlier in April due to market volatility triggered by tariff statements.

The IPO price is expected to be set this week, with shares anticipated to be priced between $34 and $36 each. Klarna is aiming to raise close to $1 billion through this public offering. Despite previous reports in March suggesting a valuation target of over $15 billion, it represents a significant decrease from its 2021 valuation peak of approximately $46 billion.

Klarna is navigating its IPO efforts amidst financial challenges, primarily driven by increased loan loss provisions. The expansion of its 'fair financing' product has necessitated a rise in credit loss reserves, resulting in a pre-tax loss of $53 million in the second quarter, a substantial increase from the $18 million loss recorded for the same period last year.

Currently, Klarna boasts a global active user base of 111 million, marking a 31% year-over-year growth, with partnerships across 790,000 merchants. As the company steps closer to its anticipated IPO, its operational metrics reflect both growth potential and existing financial pressures, underscoring the complexities of transitioning to a publicly-traded entity under market scrutiny.