Have you ever checked out online and seen that tempting “Buy Now, Pay Later” option? Chances are, it was powered by Klarna.
This Swedish fintech powerhouse has made shopping smoother for millions, but now it’s stepping into the spotlight with its upcoming IPO.
With the stock market buzzing about it, you might be asking: is Klarna a good investment? Let’s break it down step by step.
What Exactly Is Klarna?
Klarna is a buy-now-pay-later (BNPL) service that lets shoppers split payments into installments without interest for short terms.
Founded in 2005 in Stockholm, it started as a simple payment processor but evolved into a global player in flexible financing.
Today, it’s more than just payments, it’s a shopping app with deals, rewards, and even a debit card in some markets.
Think of it as a modern alternative to credit cards. You buy something, say a new gadget, and pay in four equal parts over six weeks. No interest if you pay on time, but late fees can add up.
Klarna makes money from merchant fees and a bit of interest on longer-term loans. It’s partnered with big names like Nike, Sephora, and Best Buy, making it a go-to for e-commerce.
A Quick Look at Klarna’s History and Growth
Klarna’s journey has been a rollercoaster. It began small in Sweden, focusing on making online payments easier. By 2010, it expanded to other European countries like Germany and the UK.
The real boom came in 2016 when BNPL took off, especially during the pandemic when online shopping exploded.
In 2021, its valuation skyrocketed to $45.6 billion, making it Europe’s top fintech unicorn. But then came the 2022 market crash, tech stocks tanked, and Klarna’s value plunged to $6.7 billion.
Ouch. Fast forward to 2025, and it’s bouncing back with an IPO aiming for a $14 billion valuation. That’s still a fraction of its peak, but it shows resilience.
Growth-wise, Klarna now operates in over 45 countries, with 93 million active users worldwide. In the US alone, it has about 43 million customers, its biggest market.
Gross merchandise volume (GMV), the total value of goods bought through Klarna, hit $105 billion in 2024. That’s massive, and it’s growing as more people ditch traditional credit.
Klarna’s Financial Performance: The Numbers That Matter
Numbers don’t lie, so let’s dig into Klarna’s finances. The company turned its first annual profit in 2024, netting $21 million after years of losses. Revenue jumped 22% to $2.8 billion that year, mostly from merchant fees and interest.
But it’s not all smooth sailing. In Q2 2025, revenue climbed to $823 million, up 20% year-over-year, but it swung back to a $50 million loss.
Why? Higher credit losses and expansion costs. Still, it marked five straight quarters of operational profitability in some metrics.
Here’s a quick table summarizing key financials from recent years:
| Year | Revenue ($B) | Net Profit/Loss ($M) | GMV ($B) | Valuation ($B) |
|---|---|---|---|---|
| 2021 | 1.6 | -700 | 80 | 45.6 |
| 2022 | 2.0 | -244 | 90 | 6.7 |
| 2023 | 2.3 | -244 | 95 | 7.0 |
| 2024 | 2.8 | 21 | 105 | 9.2 |
| 2025 (Q1-Q2 est.) | 1.5+ | -30 (Q2 loss) | 50+ | 14 (IPO target) |
These figures show steady revenue growth, but profitability is shaky. Klarna’s using AI to cut costs, like replacing some staff and focusing on high-margin areas like advertising and subscriptions.
Where Does Klarna Stand in the Market? Competitors and Share
The BNPL market is hot, projected to hit $500 billion by 2030. Klarna leads in Europe, with strong shares in Sweden (high adoption) and Germany (23% market share). In the US, it’s growing but faces tough competition.
Key rivals include:
- Affirm: Focuses on bigger purchases with transparent terms. It’s publicly traded and up 41% in 2025.
- Afterpay (now Block’s): Popular for fashion and smaller buys, integrated with Square.
- PayPal’s Pay in 4: Backed by PayPal’s huge user base, making it a low-friction option.
Klarna’s edge? Its app ecosystem and international reach. It has 575,000 merchant partners globally.
But in the US, its market share is around 5-8%, trailing Affirm in GMV. Overall, Klarna commands about 7% of the payments processing market, ahead of many peers.
The Pros of Investing in Klarna
If you’re eyeing Klarna stock (ticker: KLAR), there are solid upsides. First, the BNPL sector is exploding, especially among younger shoppers who hate credit card debt. Klarna’s user base is young and loyal, with 85 million active customers.
Second, its IPO timing feels right. Markets are bullish in 2025, with cooling inflation and tech rebounds. At $14 billion, the valuation is more grounded than its 2021 peak, potentially leaving room for growth.
Third, diversification plays. Klarna’s expanding into banking, ads, and AI-driven services. It launched a debit card in 2025 and a subscription like Klarna Plus for perks. If it nails profitability, shares could soar.
- Strong brand in Europe and growing US presence
- Revenue growth outpacing competitors like Affirm in some quarters
- Backed by big investors like Sequoia and SoftBank
The Cons and Risks You Can’t Ignore
No investment is risk-free, and Klarna has its share. Volatility is a big one, its valuation has swung wildly, from $45 billion to $6.7 billion in a year. What if markets tank again?
Regulation is looming. BNPL is under scrutiny for encouraging overspending. In the UK, new rules could hit profits, and the US might follow. Credit losses are rising too, up in Q2 2025.
Competition is fierce. Affirm’s GMV is strong, and giants like PayPal are muscling in. Plus, Klarna’s still burning cash on expansion, net losses persist despite revenue gains.
- Economic downturns could spike defaults
- Dependence on merchant partnerships
- AI hype might not deliver long-term savings
What’s Next for Klarna? Future Outlook
Looking ahead, Klarna’s future looks promising if it executes well. The IPO could raise $1.27 billion to fuel growth, like more US partnerships and tech investments.
Analysts predict the BNPL market will grow to $500 billion by 2030, and Klarna’s positioned to grab a chunk.
In 2025, expect focus on profitability, it’s rehiring humans after AI cuts backfired.
If it hits consistent profits and expands services like high-yield savings, stock could double in a few years. But watch for tariff impacts or recession signals, as fintechs are sensitive.
Overall, if you’re bullish on digital payments and can handle volatility, Klarna might be worth a look post-IPO.
FAQs About Is Klarna a Good Investment
Q. When is Klarna’s IPO happening?
Klarna’s IPO is set for the NYSE, with shares priced between $35 and $37, expected around September 10, 2025. It’s aiming to raise up to $1.27 billion.
Q. Is Klarna profitable?
Yes and no. It posted its first annual profit of $21 million in 2024, but reported a $50 million loss in Q2 2025 due to credit losses. It’s focusing on operational profits.
Q. How does Klarna compare to Affirm?
Klarna has higher global GMV ($105 billion vs. Affirm’s lower figures) and more users, but Affirm is more US-focused and already public. Klarna’s valuation at IPO is lower than Affirm’s current $18 billion market cap.
Conclusion
So, is Klarna a good investment? It depends on your risk tolerance. The company’s growth story is compelling, with booming BNPL demand and a more reasonable valuation now.
But challenges like losses, competition, and regs could trip it up. If you’re in for the long haul and believe in fintech’s future, it might pay off. Do your homework and watch the IPO debut closely.
Disclaimer: This blog post is for informational purposes only and not financial advice. Investing involves risks, including loss of principal. Consult a professional advisor before making any decisions. All data is based on publicly available sources as of September 2025.
Anurag is a passionate researcher and writer who enjoys exploring diverse topics and sharing valuable insights through his blogs. With a strong interest in personal finance and automobiles, he simplifies complex ideas into easy-to-understand content for readers of all backgrounds.
