Core Viewpoint - Klarna's IPO is viewed positively despite its shares climbing, with potential for further growth and a valuation of over $17 billion [1][6]. Company Overview - Klarna opened at $52 and experienced a 14.55% increase on its first trading day, following an IPO priced above expectations [2]. - The company is recognized for its buy now, pay later services, but also offers consumer financing and spending tracking tools [3]. Financial Performance - Klarna has been profitable prior to 2019 but shifted focus to growth, resulting in unprofitability since then. However, profitability has been improving since 2023, with strong growth and reduced earnings losses [5]. - The majority of Klarna's revenue comes from transaction and service fees, alongside advertising revenue and interest from traditional lending [3]. Market Position and Competitors - The IPO market is currently strong, with an IPO index reaching a three-year high, benefiting companies like Klarna [2]. - Klarna's valuation is supported by the success of its competitors, such as Affirm and Sezzle, which are profitable [6][7]. Investment Considerations - Cramer expressed concerns about the IPO structure, noting that many shares were sold by existing shareholders rather than the company itself, which typically raises questions about the use of funds [6]. - Despite this, Klarna is seen as a seasoned company ready for public markets, having been prepared to go public for years [6].
Here's why Jim Cramer thinks red-hot IPO Klarna is still a buy at these levels