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The buy now, pay later firm is ready to make a splash.

One of the leading buy now pay later (BNPL) firms, Klarna, is about to make a big splash in the U.S. The fintech, based in Sweden, is the leading BNPL player in Europe and it is among the top competitors in the U.S. And last week, Klarna filed papers with the Securities and Exchange Commission (SEC) to go public.

In addition, Klarna recently announced a huge win, signing a deal with the nation’s largest retailer, Walmart (NYSE: WMT) to become the mega-chain’s exclusive BNPL provider.

Klarna, for those who haven’t used it, allows customers to buy goods at the point of sale in installment payments, which Klarna’s AI-driven tech approves, calculates and executes in mere seconds.

Klarna replaces one of its chief rivals, Affirm (Nasdaq: AFRM) as Walmart’s exclusive BNPL provider. As might be expected, Affirm stock was plummeting on Tuesday, down about 9%.

Game changer for Klarna

In the Walmart deal, Klarna is partnering with OnePay, a consumer finance app, to offer U.S. customers the option to use installment loans at Walmart.

OnePay is already integrated into Walmart’s physical and digital channels, offering a range of financial services to its customers and employees. Now, through the Klarna partnership, OnePay will add installment loans to its portfolio of banking, credit, and payments products. 

“This is a game changer,” Sebastian Siemiatkowski, co-founder and CEO at Klarna, said.“Millions of people in the U.S. shop at Walmart every day — and now they can shop smarter with OnePay installment loans powered by Klarna. OnePay choosing Klarna as their exclusive installment loans partner at Walmart in the U.S. is a huge vote of confidence as we pursue our goal of being available everywhere for everything.”

Going public

The Walmart deal should provide a significant revenue boost for Klarna as it prepares to go public.

The papers for the initial public offering (IPO) were filed last Friday, March 14, with the SEC. The number of shares to be offered and the price range for the proposed offering have not yet been determined – nor has the IPO date. But Klarna will trade on the New York Stock Exchange (NYSE) under the ticker KLAR.

Goldman Sachs, J.P. Morgan, and Morgan Stanley are handling the IPO, which some analysts say could be valued at $20 billion, making it one of the largest of the year.

It is one of several fintechs expected to go public this year, along with Chime Financial, Revolut, and brokerage firm eToro. There have been talks of Stripe going public, but outlets like the Wall Street Journal say it may not happen this year.

IPO market

This appears to be a decent market for IPOs, as Dealogic reported that the value of U.S. IPOs is up 62% through early March compared to the same period last year. Further, the number of deals so far has doubled year-over-year.

But, there is also much uncertainty related to interest rates, inflation, and the state of the economy, which could cloud things moving forward. However, fintechs may be better positioned than most, as the financial sector has performed well and is heading into a favorable regulatory environment.

The last major BNPL to go public was Affirm back in early 2021 at $49 per share. It rode the post-pandemic tech boom to ridiculous heights, reaching 165 per share before crashing down in 2022 under the weight of high inflation and high interest rates, followed by the banking crisis of early 2023. It hit a low of just below $9 per share in April 2023, before climbing back up to its current $44 per share.

Klarna likely will come into the market under better conditions, with interest rates probably trending lower and inflation down off its highs.

Klarna also has solid financials, generating $2.8 billion in revenue in 2024, a 24% increase, and posting net income of $21 million, up from a net loss of $224 million in 2023. Further, it has 93 million active customers and 675,000 merchants.

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