Klarna's Valuation and Growth Potential in the Post-Payment Boom Era: Assessing Undervaluation Amid Market Shifts

The IPO Debut and Market Reception

Klarna's September 2025 initial public offering (IPO) marked a pivotal moment for the buy-now-pay-later (BNPL) sector. The company raised $1.37 billion by selling 34.3 million shares at $40 each, valuing it at $15.1 billion Klarna Valued at Nearly $20 Billion as Shares Jump in NYSE Debut^[1]. On its NYSE debut, shares surged 14.6% to close at $45.82, reflecting investor optimism about its role in reshaping consumer finance Buy Now, Pay Later (BNPL) Growth Raises Concerns^[3]. This valuation, while significantly lower than its 2021 peak of $45.6 billion, signals a recovery after years of financial turbulence, including a 2023 restructuring that slashed costs and improved profitability Klarna made a solid debut on the New York Stock Exchange with …^[5].

Financial Performance and Sector Positioning

Klarna's Q2 2025 results underscore its improving fundamentals. Revenue hit $823 million, with an adjusted profit of $29 million, driven by disciplined cost management and a 0.89% delinquency rate for short-term “pay-in-4” loans Klarna made a solid debut on the New York Stock Exchange with …^[5]. By comparison, Affirm, the sector's dominant player at $28 billion in valuation, has seen its stock rise 40% in 2025, fueled by its focus on larger, long-term financing options Klarna Valued at Nearly $20 Billion as Shares Jump in NYSE Debut^[1]. While direct valuation metrics like P/E or P/S ratios remain opaque for both companies, Klarna's profitability and lower-risk loan structure suggest it is carving a niche in the BNPL space.

Sector Growth and Regulatory Headwinds

The BNPL sector is on track to reach 91.5 million U.S. users by year-end, driven by its appeal to younger demographics and high-income households Buy Now, Pay Later (BNPL): What Is It, How Does It Work?^[2]. Services like Klarna's interest-free installments have become a staple for everyday purchases, from groceries to fashion. However, this growth has sparked regulatory scrutiny. Critics warn that BNPL's lack of credit bureau reporting and minimal consumer protections could mask debt vulnerabilities Buy Now, Pay Later (BNPL) Growth Raises Concerns^[3]. Morgan Stanley analysts note that while BNPL delinquency rates remain lower than credit card defaults, the sector's rapid expansion risks regulatory intervention, particularly as FICO plans to integrate BNPL data into credit scoring models by 2026 What Is Buy Now, Pay Later?^[4].

Online Sentiment and Competitive Dynamics

Online discourse on platforms like Reddit and Twitter reveals a mixed sentiment toward BNPL. Enthusiasts praise its flexibility, while critics highlight the potential for overleveraging. Klarna's emphasis on short-term, low-risk transactions has garnered a loyal user base, but Affirm's focus on larger purchases (e.g., electronics, furniture) has attracted investors seeking higher-growth opportunities. The absence of detailed 2025 P/E or EBITDA metrics for Klarna complicates direct comparisons, but its adjusted profit margin of 3.5% (calculated from Q2 results) suggests operational efficiency Klarna made a solid debut on the New York Stock Exchange with …^[5].

Is Klarna Undervalued?

Klarna's $15.1 billion valuation appears cautiously optimistic. While its financials show progress, the stock's 15% first-day gain may not fully account for sector-specific risks. Regulatory shifts, such as mandatory credit reporting or interest rate caps, could erode margins. Conversely, the BNPL sector's projected growth and Klarna's strong brand position in Europe and North America offer upside. Investors must weigh these factors against Affirm's higher valuation and the sector's inherent volatility.

Conclusion

Klarna's IPO underscores the BNPL sector's enduring appeal, even amid macroeconomic uncertainty. Its financial discipline and strategic focus on low-risk transactions position it as a resilient player, but regulatory and competitive pressures remain critical risks. For now, the stock's valuation appears balanced—neither a clear bargain nor a speculative overreach—making it a watchlist candidate for investors with a medium-term horizon.