Core Insights - Klarna, a Swedish fintech known for its "buy now, pay later" services, has expanded into a comprehensive payments ecosystem with over 100 million active users and partnerships with major retailers like Walmart and eBay [2] - The company went public on September 10, 2025, with an IPO price of $40 per share, raising approximately $1.37 billion and achieving a valuation of around $15.1 billion [3] - On its first trading day, Klarna's stock opened near $52, peaked at $57.20, and closed at $45.82, reflecting strong initial demand but also potential overvaluation concerns [3] Financial Performance - In 2024, Klarna processed approximately $105 billion in merchandise volume, generated nearly $2.8 billion in revenue, and recorded a net profit of $21 million, marking a significant turnaround from a loss of over $200 million the previous year [3][4] - In Q2 2025, revenue surged to $823 million, with the company gaining over 111 million active users and approximately 790,000 merchant partners [3] Profitability and Risks - Klarna's net profit of $21 million represents a net margin of less than 1%, indicating a thin profitability cushion [4] - Credit losses are managed better than the previous year, at about 0.5% of GMV in Q2 2025, but remain a significant risk, especially in the U.S. market [4] - The U.S. market presents both a major growth opportunity and a higher-risk credit landscape, with potential challenges from rising consumer delinquencies and regulatory scrutiny [4] Competitive Landscape - Klarna faces competition from other players like Affirm, PayPal, and Afterpay, all targeting the same merchants and consumers [5] - While partnerships with Walmart and eBay are significant, they often yield low economics for Klarna, raising concerns about the company's ability to increase its "take rate" and maintain margins [5] Valuation Considerations - Despite robust revenue growth and a vast merchant network, the narrow margin for error raises questions about the justification of Klarna's valuation [6] - For a bullish case to hold, Klarna must demonstrate the ability to scale profitably in the U.S., manage credit losses effectively, and convert merchant partnerships into high-margin growth [7]