Klarna set for stock debut: 2025 IPO market in focus

IPO Pricing and Valuation - Clara, a buy now pay later company, is pricing its IPO at $40 per share, valuing the company at approximately $15 billion [1] - The IPO's offer price leaves room for upside, with Affirm, another buy now pay later company, serving as a valuation ceiling [2] - Clara's international focus results in weaker margins compared to Affirm, which is more focused on the US market [3] - Clara's valuation of $15 billion is significantly lower than its previous $46 billion valuation in 2021, indicating it was overvalued during the pandemic [4] Market Conditions and IPO Dynamics - The IPO market is experiencing a resurgence due to a building pipeline of VC-backed tech unicorns ready to go public after a three-year bottleneck [6] - Investors are now more willing to pay valuations acceptable to VC-backed tech companies [6] - Low VIX, decreasing interest rates, and a three-year high in the IPO index are contributing to favorable market conditions [7] - Recent IPO pops are fueling excitement in the market [8] Underwriter Strategy - Underwriters face a delicate balancing act between maximizing money raised in the offering and creating excitement with a higher opening price [9] - While a large pop like Figma's 250% increase can generate excitement and marketing value, it can also lead to a subsequent price correction [9][12] - The goal is to build enough upside and excitement to attract investors and earn their trust over time [13]