Klarna Stock Surges 43% on NYSE Debut, Valuing Company at $15.1 Billion

Klarna Group Plc, often referred to as the "European version of Afterpay," made a strong debut on the New York Stock Exchange (NYSE) under the ticker symbol KLAR. The company's stock price surged by over 40% at its peak, providing significant gains for its major investor, Sequoia Capital. The initial public offering (IPO) was priced at 40 dollars per share, significantly higher than the initial guidance range of 35 to 37 dollars. This pricing strategy resulted in an oversubscription rate of over 20 times, indicating strong market demand.

Klarna's IPO raised approximately 1.37 billion dollars through the sale of about 34.3 million shares, valuing the company at around 15.1 billion dollars. The stock opened at 52 dollars, a 30% increase from the IPO price, and reached a high of 57.2 dollars during trading, representing a 43% gain. By the end of the trading day, the stock closed at 45.82 dollars, marking a 14.55% increase from the IPO price.

Sequoia Capital, Klarna's largest investor, has seen substantial returns from its investment. Since 2010, Sequoia has invested approximately 500 million dollars in Klarna. With the company's successful IPO, Sequoia's investment has yielded over 26.5 billion dollars in paper profits. Sequoia held 21% of Klarna's voting shares before the IPO, valued at 31.5 billion dollars based on the IPO price. The firm sold only about 2% of its shares during the IPO, retaining the majority of its stake for potential future sales.

Klarna's transition from a "buy now, pay later" (BNPL) service provider to a comprehensive financial services company has been a key factor in its success. Founded in 2005 and headquartered in Stockholm, Klarna has expanded its offerings to include savings accounts, checking accounts, and credit cards. The company holds a full banking license in the European Union and has partnerships with major players like Visa and Walmart in the United States. Klarna's user base has grown significantly, with 26 million new active users in the past 12 months, bringing the total to 90 million users across 26 countries.

The company's financial performance has also been noteworthy. In the first half of 2021, Klarna reported revenue of 1.52 billion dollars and a net loss of 153 million dollars. Despite the loss, Klarna's CEO emphasized that the company has achieved financial self-sufficiency and that the IPO was primarily aimed at formalizing stock trading and enhancing the company's credibility with customers and business partners.

Klarna's successful IPO has injected new energy into the U.S. IPO market, which has seen a resurgence in activity. The company's decision to go public was initially delayed due to market volatility caused by trade policies. However, with improving market conditions, Klarna was able to successfully launch its IPO, attracting significant investor interest.

The IPO has also highlighted internal dynamics within Sequoia Capital. Disagreements over amendments to Klarna's shareholder agreement led to the departure of a Sequoia partner from Klarna's board. The current board chairman, who has a close relationship with Klarna's CEO, remains a key figure in the company's governance.

Klarna's IPO has not only benefited its investors but also boosted the prospects of the fintech industry. The company's success has provided a positive market environment for other fintech companies, including Affirm, whose stock has risen by 132% in the past year. The upcoming IPOs of companies like Gemini, a cryptocurrency exchange, further indicate the continued momentum in the tech IPO market.