Klarna’s IPO: Everything Investors Absolutely Need to Know Before Buying In

Klarna's long-awaited public debut finally hits the market—and it's rewriting the fintech playbook.

The Buy Now, Pay Later giant storms public markets with a valuation that's making traditional bankers sweat. No more whispering about private rounds—this is the main event.

Why This IPO Matters More Than You Think

Klarna isn't just another fintech flash in the pan. It's the proxy bet for the entire consumption economy—with Gen Z and millennials fueling its rocket ship. They've bypassed credit cards altogether, and Wall Street is finally paying attention.

The Numbers That Move Markets

Forget vanity metrics—this offering lives on gross merchandise volume and merchant adoption rates. Their razor-thin margins? Actually a feature, not a bug—they're scaling where banks fear to tread.

Risks? Oh, They Exist

Regulatory hawks circle every disruptive fintech, and Klarna's no exception. Interest rate shifts could pinch profitability, and let's be real—consumer debt cycles always have the last laugh.

One cynical finance jab: Because nothing says 'stable investment' like betting on people who can't afford to pay upfront.

The Bottom Line: Disruptor or Distraction?

Klarna's IPO doesn't just offer shares—it sells a vision of financial democratization. Whether that vision holds up under quarterly earnings calls remains the billion-dollar question.

Klarna's BNPL offering

BNPL became popular during the pandemic by letting consumers make purchases with no money down. These are then paid for in installments, often interest-free, but sometimes with interest. It depends on the BNPL company's business model, and the buyer and merchant.

Image source: Getty Images.

Klarna partners with merchants to help them attract customers they may not have had access to before, while also providing potentially repeat customers. Consumers use Klarna for interest-free payments, low-fee financing, and the Klarna card for a quick checkout in stores. The company's app has an artificial intelligence assistant, so consumers can find new products at attractive prices as well as a budgeting tool for managing purchases and saving for new ones.

The company partners with payment-service providers that give it access to consumers through hundreds of thousands of merchant checkouts. It is also integrated with's Google andPay. The idea is to make Klarna an easier choice for shoppers.

The company has a banking license abroad and therefore can offer savings accounts to customers in many countries in Europe, providing a low-cost funding base. Klarna makes the bulk of its money by collecting a slight premium on each purchase.

For example, if a customer wants to purchase a product for $100 via BNPL, Klarna first runs a credit check on the customer, who can then choose to repay the $100 anywhere from 30 days to three or four weeks. If the customer is approved, Klarna sends $97.30 to the merchant and then is paid back the full $100 over time, for a small premium on the purchase.

The company makes about three-quarters of its revenue from these merchant fees, along with some advertising revenue and certain fees to consumers as well.

Growth and financials, and comparing it to the king

Based on Klarna's model, a big driver of growth is gross merchandise volume (GMV), which the company defines as the total value of completed purchases through its network in a given period, minus fees such as interest and returns.

In 2024, GMV topped $105 billion, up 14% year over year, after it grew 12% in 2023. Management has also been able to grow transactions per customer per year. For instance, in Sweden, Klarna customers on average made 28 transactions per year through the platform. In 2024, that number increased to 32.

In the second quarter of 2025, it reported year-over-year GMV growth of 21%, while active consumers grew 31% to 111 million. However, average revenue per active customer fell about 11%. In the quarter, it reported $823 million of revenue, up 21% year over year, while net losses ROSE to $53 million, up from a $2 million loss in the same quarter of 2024.

When compared to the BNPL industry leader,, which currently has a higher market cap of nearly $27 billion, Klarna does stack up well in some ways. Over the last two quarters, Klarna had GMV of roughly $56.5 billion, while Affirm's GMV was $19 billion. But they both generated similar revenue in the second quarter, with Klarna at $823 million and Affirm at $876 million.

However, they operate different business models. Klarna relies on merchant fees, while Affirm offers longer-term BNPL loans, many of which include interest fees. Affirm generated a $58 million operating profit in its most recent quarter, compared to Klarna's operating loss of $46 million.

Is Klarna a buy?

If you annualize Klarna's revenue this year, the stock trades for a little over 5 times sales, which isn't necessarily cheap but not crazy expensive in this bull market that continues to hit near-term highs.

The company's fee-heavy model from merchants, which focuses on interest-free loans, may be more sustainable through the economic cycle, although if losses do start to rise, Klarna might have to deploy more-stringent underwriting, which could slow GMV.

Having a banking charter is also an advantage over Affirm, which relies heavily on selling loans to asset managers and private credit companies. That funding can be less sustainable in an economic downturn or if interest rates were to rise significantly.

Ultimately, I'm not a huge fan of this sub-sector, given that it will likely be cyclical and the fact that consumer spending has been showing signs of weakness lately. I'd also like to see Klarna make more progress toward profitability.

But if investors are interested in this space, I could see why Klarna could appeal to them right now over Affirm, due to its lower valuation, its growth metrics, and heavier focus on fee income.