Klarna IPO Could Spark an Avalanche of Fintech Listings in 2025

Having amassed 85 million customers globally, Klarna’s float will be one of the biggest fintech listings since 2021’s IPO frenzy, which saw the finance technology sector reach $490 billion in exit value driven by initial public offerings and SPACs.

Klarna is targeting an April IPO in the United States with a valuation of up to $15 billion, which would immediately make the listing one of the largest of the year.

While the buy now pay later credit company is preparing its listing plans for March, we’re already seeing a flurry of activity from Klarna, which recently announced an expanded partnership with Stripe to expand its offerings.

Klarna also established a UK-registered holding company to pursue a published listing, with more than a dozen banks hired to work on the IPO.

Inside Klarna’s IPO

The buy now pay later trend has evolved in the post-pandemic landscape to become a key component of the fintech landscape.

The global BNPL market size is projected to grow to a value of $167.58 billion by 2032, representing a seismic CAGR of 20.7%, with North America responsible for a dominant market share of 59.94% in 2023.

With the service particularly attractive for younger consumers due to many BNPL plans offering minimal or even 0% financing, there’s plenty of lifetime value for its users. This suggests that the industry is well-positioned to continue in its growth trajectory.

Klarna is in a strong position to ride this wave of growth. The latest financial disclosures from the firm through the first three quarters of 2024 show a 16% rise in gross merchandise value (GMV) to $72.7 billion and a hike in revenues by 23% to $1.86 billion.

Although the fintech was profitable until 2019 when it started to accept credit losses to pursue expansion throughout the United States.

Klarna has also undertaken a cost-cutting initiative to reduce its balance sheet ahead of its IPO, highlighting the ongoing AI boom as a leading means of reducing its workforce.

While Klarna’s IPO may not have raised any eyebrows during the 2021 fintech boom period where countless startups were seeking out opportunities to go public, the economic and geopolitical challenges of recent years have seen listings dry up on Wall Street.

It’s for this reason that Klarna’s debut may be a watershed moment for the industry, with many more financial technology firms waiting in the wings should the listing be a success.

IPO Resurgence Looming?

Investment bankers are anticipating an upturn in dealmaking activity throughout global equity capital markets throughout 2025 thanks to a growing pipeline of initial public offerings.

This is a logical trend because of the clearing skies surrounding the 2022 tech stock sell-offs that spooked many fintech startups from going public. Despite there being 61 fintech IPOs in 2021, there were just 16 in the last three years combined, these bottlenecks have been building as firms waited for signs of recovering markets.

Following the S&P 500’s 23% growth in 2024 and the AI boom causing the index to break new ground in reaching all-time high values, all eyes are firmly fixed on 2025, making the performance of Klarna a big deal for the fintech industry as a whole.

Key fintech players like Chime, Stripe, and Circle are showing activity in addition to Klarna, while a long-mooted Revolut debut has been identified as one of the world’s biggest listings in waiting.

The reason that Klarna’s listing is a major moment for fintech debuts is because of a steep fall-off in tech valuations in the wake of the pandemic. With many startups that fundraised in 2021 at a higher value, the prospect of launching at a lower valuation has been off-putting.

At the height of the S&P 500’s pandemic rally in December 2021, software firms were valued at a median total enterprise value/revenue ratio of around 13.5x. However, by 2023, this ratio had plummeted to 6.5x.

Since 2024, we’ve seen valuations rebound to 7.8x in an upturn that’s helped to renew confidence among fintech startups. By April, Klarna’s IPO will serve as a litmus test for whether valuations have rebounded further.

Kimberley Waldron, founder and MD at fintech-focused firm Started PR, has suggested that the anticipated influx of IPOs is a tribute to the sector’s maturity and growing investor confidence in the industry’s innovations.

With more IPOs helping to provide investors with a broader spectrum of opportunities within the landscape, Waldron has suggested that a flurry of listings can help to bring more widespread confidence to fintech markets.

All Eyes on Klarna

Klarna’s pioneering presence in the BNPL space has positioned the startup as a global leader in offering the fintech service to a widespread audience.

Its April IPO will represent far more than a major fintech listing, it will provide other firms waiting in the wings with a tangible insight into what their listing could look like, and how receptive investors will be to their debut.

Klarna may be the first of fintech’s bright startups to go public in 2025, but it could pave the way for a listing resurgence throughout the industry if its debut goes well.