Klarna has evolved as the latest power player in e-commerce mobile payment solutions for entrepreneurs and small business owners. But, can you buy stock in Klarna?
Klarna is entering a narrow field in payment processing, which has been historically dominated by Square, Cash App, and Stripe. Barriers to entry are immense, but the payoffs for success are equally high!
Klarna is attempting to simplify (and streamline) the payment cycle for customers and businesses. We often don’t peg payment processing as an issue, but it’s a monstrous headache in the cash cycle.
Visa, Mastercard, Discover, and more traditional processors charge north of 3% per transaction, and Klarna is hoping to capture market share! Thus, possibly making early investors filthy rich.
Klarna has an interesting company history on their website. In fact, they are one of the few technology start-ups not founded in the United States (much less, Silicon Valley).
“Klarna was founded in 2005 in Stockholm, Sweden with the aim of making it easier for people to shop online.
In the last 15 years, technology has evolved, excited, and transformed the world around us, yet our mission remains as relevant as ever – to make paying as simple, safe and above all, smooth as possible.
Klarna is now one of Europe’s largest banks and is providing payment solutions for 85 million consumers across more than 200,000 merchants in 17 countries.
Klarna offers direct payments, pay after delivery options and installment plans in a smooth one-click purchase experience that lets consumers pay when and how they prefer to.
When the company acquired SOFORT in 2014 the Klarna Group was formed. Klarna is backed by investors such as Sequoia Capital, Bestseller, Permira, Visa and Atomico.
Klarna Inc. is headquartered in Columbus, Ohio, with offices in New York City.
We’ve built an all-star international team hailing from the world’s best companies including Apple, Google, Facebook, Zynga, Experian, Palantir, imo.im, PayPal and American Express.”
Klarna started on a small-scale and focused on building the best product possible before focusing on growth. This is a common mistake for most start-ups; they grow at an unsustainable rate.
Unsustainable growth becomes completely unmanageable when working capital is pierced and day-to-day obligations cannot be met. Klarna has been wise to avoid this conundrum so far.
McKinsey, a world leader in global consulting, issued a comprehensive report on the growth of mobile banking, FinTech, and payment processing.
“The digital revolution in banking has only just begun. Today we are in phase one, where most traditional banks offer their customers high-quality web and mobile sites/ apps.
An alternate approach is one where digital becomes not merely an additional feature but a fully integrated mobile experience in which customers use their smartphones or tablets to do everything from opening a new account and making payments to resolving credit-card billing disputes, all without ever setting foot in a physical branch.
More and more consumers around the globe are demanding this.
Among the people we surveyed in developed Asian markets, more than 80 percent said they would be willing to shift some of their holdings to a bank that offered a compelling digital-only proposition.
For consumers in emerging Asian markets, the number was more than 50 percent.
Many types of accounts are in play, with respondents indicating potential shifts of 35 to 45 percent of savings-account deposits, 40 to 50 percent of credit-card balances, and 40 to 45 percent of investment balances, such as those held in mutual funds.
In the most progressive geographies and customer segments, such as the United Kingdom and Western Europe, there is a potential for 40 percent or more of new deposits to come from digital sales by 2018.
Many financial-technology players are already taking advantage of these opportunities, offering simplified banking services at lower costs or with less hassle or paperwork.
Some upstarts are providing entirely new services, such as the US start-up Digit, which allows customers to find small amounts of money they can safely set aside as savings.”
I love how McKinsey brilliantly hits on providing a simplified service at a lower cost. This is EXACTLY what customers and businesses are looking for.
Digital infrastructure (while still expensive) is significantly cheaper than physical infrastructure. Klarna can leverage scalability to seize more market share and profitability.
Financial technology (aka FinTech) is any new technological creation that automates and innovates upon existing financial infrastructure, for the sake of improving user experience and productivity.
FinTech has been adopted, at lightning pace, by small business owners, Fortune 500 multi-nationals, and individuals to better manage their finances.
FinTech involves the use of advanced software and algorithms, which can continuously A/B test for best practices and improved results.
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If this is your first time hearing about FinTech, it certainly will not be your last time! FinTech and Klarna are here to stay.
Klarna Stock IPO
Bloomberg covered the latest IPO updates concerning Klarna.
“The company has achieved enormous popularity, especially in the U.S., thanks to its buy-now-pay-later service.
Klarna has hinted at its intention to do an IPO in the past, suggesting in December that a timeline of one to two years seemed reasonable.
Siemiatkowski said Klarna tries to be “less dependent” on the macroeconomic environment, “and more [on] when we think it makes sense for the company and the right timing for us.”
He described the latest funding round as “a great opportunity to continue building a great offering for our consumers.”
Klarna now wants to expand in Europe, with France identified as an important market, he said.”
However, the Klarna IPO date is not known at the moment. The firm has yet to release any public financial statements (S-1), which is one of the leading indicators towards a prospective IPO.
Ultimately, based on the popularity and retail demand for technology IPOs in recent months, I would expect a Klarna IPO in the near future (2-5 years).
Klarna Stock Price
CNBC outlined the latest valuation and funding rounds for Klarna.
“Klarna is now officially Europe’s highest valued private fintech company.
The Swedish online payments firm says it has raised $650 million in an equity funding round, valuing the company at $10.6 billion.
The round was led by Silver Lake Partners, alongside GIC, Singapore’s sovereign wealth fund, as well as BlackRock and HMI Capital.
To date, the Klarna app has more than 12 million monthly active users worldwide, with 55,000 daily downloads, which the company claims is almost three times as many downloads as its closest competitor over the last year.”
Valuing start-ups is already immensely difficult, and now we need to pair this with a FinTech player? They have no financials for fundamental analysis, and they lack any true industry peers.
FinTech is a historically new innovation. Ultimately though, based on a $10.6 billion equity valuation (and 200 million shares outstanding) a $53 share price would appear reasonable.
Klarna Stock Alternatives
So, you’re not sold on a FinTech, mobile payment processing stock, but you’re still interested in technology investing. What are some other possible upcoming tech IPOs?
Can You Buy Stock in Klarna?
At the moment, no, you cannot buy stock in Klarna, but you will be able to purchase shares in an upcoming IPO. Klarna’s valuation points towards a $53 share price.
I am going to be constantly looking for new updates on S-1 progress, public financials, and new valuations. Klarna could be one of the biggest financial innovations of the 21st century.
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