Klarna went from Europe’s Most worthy startup to a lesson in how briskly fortunes can change—and now, the long-delayed IPO is lastly taking place. The Swedish firm turned “purchase now, pay later,” or BNPL into a world catchphrase and gained the hearts of Gen Z alongside the best way. Now it’s getting ready to record shares at an estimated $14 billion valuation, nevertheless it’s been fairly a trip to get there, together with a 69% fall from the $45.6 billion perch it as soon as loved.
Again in 2021, the Swedish BNPL big was hovering in subsequent fundraises, first changing into Europe’s startup champion after which coming solely behind Stripe amongst fintechs globally. Nonetheless, a $14 billion IPO represents a redemption arc for an organization that might’ve simply been one other cautionary story—its valuation plunged by as a lot as 85%, to $6.7 billion by 2022. Klarna has cleaned up its funds, diversified into advertisements and shopper options, and now appears extra like a disciplined fintech platform than a free-spending rocket ship.
The corporate, backed by traders together with Sequoia Capital and Silver Lake, filed for a U.S. preliminary public providing that might come by 12 months’s finish. It might be among the many largest listings of a European know-how firm in recent times. At its peak in 2021, Klarna was valued greater than some European banks. However rising rates of interest, tighter regulation of BNPL companies, and investor skepticism towards profitless progress led Klarna to slash working prices, minimize employees, and search capital at progressively decrease valuations.
In current quarters, Klarna has reported progress. Losses have narrowed, and administration has shifted its focus from growth to measured progress and profitability. Analysts say its giant service provider community and shopper adoption stay aggressive benefits, although questions persist in regards to the sturdiness of its installment-payment mannequin in a higher-rate atmosphere. In its regulatory submitting, Klarna mentioned it was worthwhile for its first 14 years earlier than increasing into the U.S. and different markets, and it hasn’t recorded an annual revenue since 2018. “In 2023, our working loss began to say no and we started producing optimistic transaction margin {dollars} in the US,” the corporate mentioned in its regulatory submitting. So why did Klarna’s worth collapse after its income did—and why is it headed towards a seeming rebound on the general public markets?
1) The top of low rates of interest
Tech valuations normally have suffered since 2022, when the Federal Reserve hiked rates of interest aggressively to fight rising inflation. Many frothy enterprise fashions that trusted straightforward credit score—BNPL foremost amongst them—suffered as capital grew to become costlier. Broader macroeconomic volatility has weighed on many companies just like Klarna, as geopolitical unrest and commerce coverage uncertainty have mixed to place a cap on funding.
The S&P 500 has change into terribly concentrated, led at occasions by the “Magnificent Seven,” and currently the Magnificent Six with out Tesla. Nvidia has shot to a outstanding $4 trillion-plus market cap and might transfer markets now by advantage of its tremors. At occasions, the S&P 500 is extra just like the S&P 10.
2) Client slowdown
The American shopper is the engine of the American financial system, liable for two-thirds of GDP most years. And but one thing humorous has occurred in 2025, as the huge surge in data-center building related to the AI revolution has contributed extra to GDP progress than customers getting out and purchasing. This isn’t to say that data-center building is two-thirds of GDP, however that it’s rising quicker than the common shopper, who’s exhibiting indicators of fatigue amid a stagnant labor market and a rising inflation backdrop.
Apollo International’s chief economist Torsten Slok has warned that inflation might resume its upward climb from the 2021 surge that kneecapped Klarna’s highest valuation, seeing a possible “inflation mountain” looming forward. Then again, customers who’re strapped for money could also be turning extra to BNPL companies, as LendingTree discovered 14% of U.S. adults who used the companies to purchase groceries in 2024 evolving into 25% the following 12 months. Shoppers might decelerate, however rising inflation and even a recession might push them extra into financing purchases with the assistance of BNPL companies.
3) Regulatory scrutiny
Klarna got here underneath scrutiny from the Client Monetary Safety Bureau (CFPB) through the Biden Administration, which actually favored stronger regulation than the CFPB underneath both Trump regime. Some Senators and state Attorneys Common have urged the CFPB to take a stronger supervisory hand with BNPL companies, voicing issues that susceptible, low-income customers had been vulnerable to being focused.
The trade has fought again, with a commerce group that included Klarna suing the CFPB at one level over “not possible” disclosure guidelines. As of 2025, the CFPB has deprioritized federal enforcement in BNPL, indicating a shift towards fragmented oversight, with expectations for extra state-led regulatory actions and frameworks.
Can the unicorn trip once more?
Over the previous two years, the corporate has rebuilt with a give attention to slicing losses, increasing into adjoining companies like promoting, and dealing towards profitability. The IPO is anticipated to check investor urge for food for fintechs that when commanded dizzying valuations however now face extra conventional public-market scrutiny on margins and earnings.
The itemizing, anticipated in New York later this 12 months, will nonetheless mark one of the vital European tech IPOs of the last decade. Buyers will probably be watching intently to see whether or not Klarna’s new chapter proves it may possibly outgrow its BNPL roots — or whether or not once-hot fintechs will wrestle to recapture their private-market shine.
For this story, Fortune used generative AI to assist with an preliminary draft. An editor verified the accuracy of the data earlier than publishing.
