Shares of online-payments provider Klarna jumped as much as 30% on Wednesday in the Swedish firm’s closely watched NYSE debut, the latest sign that a long-suffering IPO market is alive and kicking.
Klarna traded at $52 early Wednesday afternoon, a day after its initial public offering price was set above the previously estimated range, before later trading around $48, up 20%.
The offering encountered strong demand that helped boost Klarna’s valuation to more than $19 billion at the opening price when shares began trading on the New York Stock Exchange under ticker KLAR.
Klarna’s big first-day pop adds to the recent momentum among new listings in the U.S. this summer, following three years of weak issuance and poor returns. In June, stablecoin issuer Circle Internet Group’s stock soared in its debut. In late July, software company Figma’s stock jumped 250% in one of the splashiest IPOs in recent memory.
Early investors in Klarna—including Sequoia Capital, which first invested in the company 15 years ago—are the big winners of Wednesday’s offering.
But Klarna’s rising valuation carries a possible warning for investors in the IPO, analysts and investors said. Large artificial intelligence companies are raising money at steeper valuations months after prior funding rounds, raising concerns that some of the recent deals may come at prices that won’t be sustainable.
Even with the big first-day pop, Klarna’s valuation is a fraction of the $45.6 billion it reached in 2021, when a previous gusher of money rushed into private companies.
Firms that purchased stakes in 2021—including SoftBank’s Vision Fund 2, which purchased stock at a price that valued Klarna at $30 billion as well as shares that later valued it at $45.6 billion—are in the red on paper.
Founded in 2005, the Sweden-based company is best known as a buy now, pay later lender. It has been making a push to become a fully fledged bank, recently launching products such as a U.S. debit card in partnership with Visa.
Klarna is also slated to become the exclusive buy now, pay later provider at Walmart in the U.S. It has been introduced on eBay U.S. and will begin rolling out services on Nexi, Worldpay and J.P. Morgan Payments in the coming months.
Klarna was slated to be a highly anticipated 2022 IPO before the new listings market slowed that year as interest rates rose. Instead of making a buzzy debut, Klarna laid off hundreds of workers to cut costs and accepted a cut of about 85% to its valuation in a 2022 funding round.
