Klarna debuted on Wall Street at $40. Analysts expect a price target of $45 to $52, but the most optimistic scenarios point to a 79% increase. Here’s why.
Klarna has made its Wall Street debut. After years of anticipation, the Swedish company, the king of "buy now, pay later," went public on Wednesday, September 10th. And it did so with a bang. The IPO price was set at $40 per share, well above the initial $35-$37 range.
The move brought its valuation to $15.1 billion and raised $1.37 billion in IPO proceeds. And the fact that the offering was 25x oversubscribed is a clear sign that the market believes in the future of "buy now, pay later," even in a context of falling interest rates and a global economy still sending mixed messages.
But is it really worth jumping on board today, at these prices? And how do we interpret an IPO that reaches a valuation a third of its 2021 peak, when Klarna was nearly $45 billion? Is it a sign of caution or a golden opportunity for investors with a long-term perspective? At a time when Wall Street continues to break records and the US economy is surprisingly resilient, Klarna’s IPO becomes a litmus test for understanding the market’s direction.
Klarna’s Numbers
Behind the euphoria of the launch lies a story of transformation. Klarna was founded in 2005 in Stockholm with the idea of simplifying online payments, when Amazon was not yet a global giant and digital shopping was in its infancy. After years of explosive growth and just as many losses, 2024 was the turning point, with $2.8 billion in revenue and $21 million in net income. This result was achieved by reducing costs, streamlining staff, and focusing on automation. Let’s not forget that artificial intelligence-based customer support has cut $40 million in annual expenses.
The most recent numbers tell a mixed story. In the second quarter of 2025, Klarna’s revenues rose 20% compared to the same period the previous year, to $823 million. Profitability rose for the fifth consecutive quarter, with adjusted operating income of $29 million. Yet, behind this facade, a net loss of approximately $52 million remains, attributable to increased costs for credit losses, financing costs, and a one-off charge of $24 million related to restructuring plans. Furthermore, the revenue structure continues to depend largely on the "buy now, pay later" model: approximately 75% comes from fees paid by merchants and consumers, while only 25% comes from interest income. This concentration could become a weakness if the BNPL market were to slow or if regulations were to tighten.
On Wall Street, it will also face competition from Affirm, the US BNPL giant, valued at $29 billion and already up 45% since the beginning of the year. While Affirm finances larger purchases at zero interest rates, Klarna remains focused on everyday expenses and short-term loans. This is an interesting game for those who believe the European model can find a place in a billion-dollar market. Klarna boasts higher price-to-sales ratio than its competitors, but also greater risk and variable margins.
At what price is it worth buying the stock?
At $40 a share, Klarna is much cheaper than it was three years ago, when it was the most valuable startup in Europe. This could be a good thing for investors. It reduces the risk of overpaying, but its growth potential remains to be seen.
For now, major investment banks are confident in Klarna’s debut. Goldman Sachs has initiated coverage with a "buy" recommendation, highlighting the growth potential of the BNPL market and setting a target price between $45 and $50, slightly above the offering price. JP Morgan has assigned a Buy/Overweight rating, betting on the fintech’s ability to penetrate the US market and monetize new services and partnerships. Morgan Stanley sees the stock as a buy and accumulate rating. Barclays, Citi, and Deutsche Bank have also indicated a price target range of $45–$52, recommending accumulate, implicitly assuming that adjusted operating margin remains positive and grows quarter over quarter.
In a scenario with improving margins and costs under control, the target price could rise to $60–$70. Only if Klarna manages to consolidate strong net profits and maintain revenue growth above 35% could the price approach the $80-$90 range.
Therefore, the stock could be attractive for investors with a long-term horizon.
In an environment of falling interest rates and resilient consumption, a bet on BNPL makes sense. But be careful: the sector remains exposed to the risk of defaults and competition from big tech companies, which could decide to enter the market en masse, reducing Klarna’s competitive advantage.
Original article published on Money.it Italy 2025-09-11 12:18:30. Original title: Ipo Klarna, a che prezzo conviene comprare il titolo?
