After 20 years as a private company, Klarna is set to go public this week. The Swedish buy now, pay later giant reached a $46 billion valuation in 2021 but saw an 85% drop in 2022 due to economic factors. Klarna plans to list in New York, seeking to raise $1.25 billion and potentially valuing the company at $14 billion.

Klarna generates revenue through interest fees, late fees, merchant commissions, and banking services. In 2024, the company reported $2.8 billion in revenue, a $21 million net profit, and 111 million users across 26 markets. Despite a $53 million net loss in Q2 2025, Klarna is focused on growth and investing in AI technology.

Klarna’s $14 billion valuation for its IPO is seen as conservative compared to peers like Affirm, which has a market cap of $28.4 billion. Affirm trades at 8.9 times revenue, while Klarna trades at 5 times. Factors like higher growth rates and business models influence the valuation differences between the two companies.

The outlook for Klarna’s IPO is positive, with growth forecasts and new customer acquisitions driving optimism. Revenue is accelerating in the US, Klarna’s largest market, and the company secured a deal with Walmart. Concerns remain about the company’s net loss and AI strategy, but overall, Klarna’s IPO is expected to perform well in the current market environment.

Read more at Morningstar: What’s Behind Klarna’s $14 Billion IPO Valuation?