Klarna, the Swedish "buy now, pay later" fintech company, has officially paused its plans for a long-anticipated initial public offering (IPO) in the United States, originally aimed at achieving a valuation of $15 billion. The decision comes in response to significant market turbulence in the US following announcements by former President Donald Trump concerning wide-ranging tariffs. The company was set to commence its IPO "roadshow" to potential investors next week, but uncertainty in the financial markets has compelled Klarna to put these plans on hold.
According to reports from the Financial Times, a source familiar with Klarna's strategy stated that the company is under no regulatory pressure to proceed with the IPO within a defined timeframe, indicating that the listing could potentially be rescheduled for several weeks in the future. The Wall Street Journal was the first to report this halt in Klarna’s IPO process.
The postponement of Klarna's IPO follows a wave of turbulence in the US stock markets, which saw the S&P 500 and Nasdaq indexes both plummet by more than 4 percent. This turmoil is largely attributed to fears that the newly announced tariffs could push the global economy towards a recession. In this broader context, Klarna's key competitor, Affirm, also faced challenges, with its stock sliding by 15 percent in the same market sell-off.
The Daily Mail highlighted that Klarna's innovative lending model integrates into online retail checkout pages, allowing consumers to pay for purchases in smaller increments over several months, usually in exchange for interest. The pause in their IPO plans marks a setback for the company, which had been targeting a significant increase in valuation, moving from its last valuation of $6.7 billion achieved in 2022.
Additionally, perceptions of market instability have affected other businesses as well, with ticketing marketplace StubHub also retracting its IPO plans for the week. Technology giant Nintendo has similarly decided to delay the pre-order launch of its Switch 2 console in the United States, stating that it needs to evaluate the potential impact of tariffs and the evolving market conditions. The company announced that while the pre-orders initially scheduled for April 9, 2025, will be postponed, the official launch date of June 5, 2025, remains unchanged.
As these events unfold, market observers continue to scrutinise the implications of Trump's tariff announcements on not just individual companies like Klarna and Nintendo, but the entire financial landscape and its potential effects on everyday American consumers, particularly those whose retirement savings are linked to the stock market.
Source: Noah Wire Services