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Klarna is ready to ride the IPO roller coaster

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Going public right now is like a roller coaster with a serious height restriction—only the tallest companies can buckle up for the ride. 

Klarna, the Swedish fintech unicorn that made its name in buy now pay later, last week filed to go public on the New York Stock Exchange under the ticker “KLAR.” And Klarna appears to meet the height requirement, so to speak—the company reported 2024 revenue of $2.8 billion (up from about $2.3 billion in 2023) plus 2024 net profits of $21 million. On Monday, Klarna followed up its F-1—not an S-1 because the company is based in Stockholm—by announcing it’s nabbed an exclusive buy now pay later deal with Walmart, a blow to rival Affirm. 

“Klarna is in a unique position with great revenue growth and the recent partnership with Walmart,” said Reena Aggarwal, director of the Georgetown University Psaros Center for Financial Markets and Policy, via email. “Even if this IPO is successful, it is not clear that IPOs more broadly will have a similar outcome.”

It’s important to remember that Klarna got here after enduring adversity. The company’s peak valuation in 2021 was $45.6 billion, and then tumbled to a low of $6.7 billion in 2022 in response to macroeconomic conditions and the fintech downturn. Since, the company’s valuation has gradually grown again, hitting the $15 billion range in the secondary markets. 

“Klarna was one of the first companies to ‘take their medicine’ in 2022 and substantially lower their valuation,” said Greg Martin, Rainmaker Securities managing director. “It was a bitter pill to swallow, but shows a prudent reset to create a few years of sustainable valuation growth to create a positive trajectory for an IPO. I think this will serve them well as investors like to think they are investing in long-term sustainable growth stories.”

“An important aspect of Klarna’s filing is their turnaround narrative—transitioning from substantial losses to achieving profitability ahead of their public debut,” Rudy Yang, PitchBook emerging technology senior analyst, said via email. “This reflects the market’s evolving expectations. However, their consumer credit losses represent a significant portion of their expenses, and could be further impacted by a potential economic down-cycle.”

Success for Klarna could have substantial ripple effects, private markets watchers say. 

“A strong debut by Klarna could encourage profitable or nearly profitable companies to go public once macro conditions stabilize,” said Howe Ng, head of data and investment solutions at Forge Global, via email.

These ripple effects could be especially clearly felt in fintech. 

“Klarna’s IPO represents a critical test case for the fintech sector, which has experienced a significant drought of public exits in recent years,” said PitchBook’s Yang. “For context, fintech public listings generated $222.7 billion in VC exit value in 2021. In the last three years combined, they generated just $28.7 billion.”

The IPO drought and fintech’s tough times have both coincided with the end of the ZIRP (zero interest rate policy) era, which led to higher interest rates and dicey consumer spending trends. 

“Investors and fintech companies alike will closely watch Klarna’s public market debut, as the company’s valuation and investor reception will establish a benchmark that could either accelerate or further delay the next wave of fintech offerings,” Yang added via email. 

I know, I know. The essential question remains: Is the IPO window open? CoreWeave, for example, carries a few big question marks, but recently filed to go public.

“The IPO market had opened up, however, it is very tough to get IPOs done when there is uncertainty and market volatility of last week,” Georgetown’s Aggarwal told Fortune. “Only the very strongest companies can go public in this environment and even they may get lower valuations than otherwise. We might need to wait for the markets to calm down before the IPO window opens fully.”

Until then, companies must be pretty darn tall to ride the IPO roller coaster. And once you’re on the ride, you’re likely to be thrown for a loop—or even a “loop-de-loop.” So, keep your arms, feet, legs, filings, and financials inside the ride. 

ICYMI… The SEC has issued new guidance making it easier for private equity and VC firms to more publicly advertise their funds and verify accredited investors based on high minimum investments. You can read more from Axios about the latest on Rule 506(c) here. Elsewhere, the Google-Wiz deal is reportedly back on, this time for (a reported) $33 billion.

See you tomorrow,

Allie Garfinkle
X:
@agarfinks
Email: alexandra.garfinkle@fortune.com
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This story was originally featured on Fortune.com



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Meta becomes final Magnificent 7 stock to turn negative in 2025

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Meta Platforms Inc. tumbled into negative territory Tuesday, becoming the last of the so-called Magnificent Seven stocks to turn lower this year.

The Facebook parent fell more than 4%, extending a recent selloff. Its decline is especially notable as it comes in the wake of a historic rally that saw shares gain for an unprecedented 20 straight sessions. At its peak, the stock climbed nearly 26% in 2025, but it has since erased all those gains. 

Meta has lost a certain amount of flexibility given their investments into artificial intelligence, according to KeyBanc Capital Markets analyst Justin Patterson, who cut his price target on the stock to $710 from $750, citing “greater macro uncertainty.” 

“The challenge we see today is that the AI cycle is increasing fixed costs” at Meta, “which limits the ability to reduce expenses in a downturn,” Patterson wrote in a note, which also said Google parent Alphabet Inc., another Magnificent Seven company, faces similar headwinds.

Tech has come under broad-based pressure this year as the economic outlook has been roiled by the Trump administration’s policies on tariffs and questions about the direction of the AI trade. The Magnificent Seven stocks — Apple Inc., Microsoft Corp., Nvidia Corp., Amazon.com Inc., Tesla Inc., Alphabet and Meta — are seen as particular beneficiaries of AI.

The Bloomberg Magnificent 7 Total Return Index is down 16% this year, and more than 20% off its December peak. Among notable decliners, Tesla is down 44% this year, while Alphabet is down 17%, and both Apple and Nvidia are off 14%. The index is lower by over 2% on Tuesday.

Meanwhile, the broader Nasdaq 100 Index is down 7.3% so far this year, recently falling into a correction. The tech-heavy index is currently more than 12% below its own peak.

Big tech’s two-year outperformance has made it a favored place for investors to take profits amid the uncertainty. 

This story was originally featured on Fortune.com



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Exclusive: Superlawyer David Boies expected to hit Boeing with wrongful death suit spurred by suicide of whistleblower John Barnett

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Proposed Trump policy could force thousands of citizens applying for social security benefits to verify their identities in person

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Trump’s Social Security Administration proposed a major change that could force thousands of people every week to show up at a shrinking list of field offices before they can receive benefits.

In an effort to combat fraud, the SSA has suggested that citizens applying for social security or disability benefits over the phone would also need to, for the first time, verify their identities using an online program called “internet ID proofing,” according to an internal memo viewed by the Washington Post.

If they can’t verify their identity online, they will have to file paperwork at their nearest field office, according to the memo sent last week by Acting Deputy Commissioner for Operations Doris Diaz to Acting Social Security Commissioner Leland Dudek.

The memo acknowledged the potential change could force an estimated 75,000 to 85,000 people per week to seek out field offices to confirm their identities and could lead to “increased challenges for vulnerable populations,” “longer wait times and processing time,” and “increased demand for office appointments,” the memo read, according to the Post

The change would disproportionately affect older populations who may not be internet savvy, and those with disabilities. Claimants seeking a field office will also have fewer to choose from, as more than 40 of 1,200 are estimated to close, the New York Times reported, citing advocacy group Social Security Works. The list of offices slated to close is based on an unreliable list released by DOGE, according to Social Security Works. Elon Musk’s DOGE has also said it will cut 7,000 of the SSA’s 57,000 employees. 

The White House and the Social Security Administration did not immediately respond to Fortune‘s request for comment.

The SSA previously considered scrapping telephone service for claims, the Post reported, but backtracked after a report by the outlet. Regardless, the SSA said claimants looking to change their bank account information will now need to do so either online or in-person and could no longer do so over the phone.

Almost every transaction at a field office requires an appointment that already takes months to realize, according to the Post. 

The White House has repeatedly said it will not cut Social Security, Medicare, or Medicare benefits, and has said any changes are to cut back on fraud. A July 2024 report from the Social Security Administration’s inspector general estimated that between fiscal 2015 and fiscal 2022, the SSA sent out $8.6 trillion in disbursements. Fewer than 1% of the disbursements, or $71.8 billion worth were improper payments, according to the report.

Acting Social Security Commissioner Dudek said for phone calls, the agency is “exploring ways to implement AI — in a safe, governed manner in accordance with” guidance from the Office of Management and Budget “to streamline and improve call resolution,” according to a Tuesday memo obtained by NBC News.

Dudek mentioned in the memo that the agency has been frequently mentioned in the media, which has been stressing out employees.

“Over the past month, this agency has seen an unprecedented level of media coverage, some of it true and deserved, while some has not been factual and painted the agency in a very negative light,” he wrote. “I know this has been stressful for you and has caused disruption in your life. Personally, I have made some mistakes, which makes me human like you. I promise you this, I will continue to make mistakes, but I will learn from them. My decisions will always be with the best intentions for this agency, the people we serve, and you.”

This story was originally featured on Fortune.com



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