The IPO market is finally showing some signs of life in 2025, with CoreWeave’s January S1 filing, kicking off potential deal activity in the tech space. Now, the tech world is buzzing over the news Klarna has filed for its much-anticipated U.S. IPO, reportedly seeking a $15 billion valuation.
Update:Klarna has since delayed its IPO plansas a result of market volatility in response to global tariffs.
Below, we leverage proprietary expert interviews and other insights from the AlphaSense platform to dive into Klarna, its growth prospects, and the competitive dynamics of the buy now, pay later (BNPL) market.
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The Key to BNPL’s Growth Prospects
Klarna is a Swedish payments firm specializing in buy now, pay later (BNPL). Projections sourced from the AlphaSense platform show analysts expect total U.S. buy now, pay later spending to surge more than 20% year over year to nearly $100 billion in 2025.
Experts are bullish about BNPL’s growth prospects and its potential to disrupt the traditional credit card ecosystem. As an early entrant in the BNPL space, Klarna is viewed as a key beneficiary of this disruption.
“The beautiful thing about buy now, pay later is that you could approve someone that, traditionally, you'll probably not be available to get a credit card, but you could approve them here because you might be only approving them for $250 credit line and letting it grow as time went by. That was another advantage for a Klarna, as they could say,
Klarna is at the center of the rapidly growing BNPL market, competing with Affirm, Afterpay, SoFi and others for BNPL market share. Estimates show Klarna replacing Affirm as the U.S. BNPL market leader as soon as 2027. A former Klarna director says 14%-15% year-over-year growth is reasonable to expect from Klarna in the near term.
Klarna’s Global Expansion Strategy
Experts pinpoint Klarna’s global expansion strategy as another key differentiator. The company has expanded its global presence significantly of late and now operates in 26 countries.
Klarna’s ubiquity across regional markets sets it apart from other BNPL peers that do not operate on the same global scale. This is a key selling point for payment processors like Stripe that work with merchants worldwide and need a BNPL solution to match.
The synergies at play are so powerful that Klarna has persuaded companies like Stripe, JPMorgan Payments, Worldpay and Audion to turn on the Klarna platform by default instead of through opt-ins. Experts expect these key strategic partnerships to drive Klarna’s growth in the months and years to come.
Even more recently, Walmart’s OnePay selected Klarna as a BNPL provider for customers shopping in Walmart stores, company filings show. The partnership is expected to go live later in 2025. OnePay will reportedly handle the user experience via its app, while Klarna will make underwriting decisions for loans ranging from three to 36 months in length, and with annual interest rates from 10% to 36%.
Klarna’s AI Advantage
As opposed to Affirm and other peers, Klarna offers technology assets that experts say are more broadly relevant to the fintech use case.
One key example is artificial intelligence. News broke in September 2024 that Klarna had developed its own in-house AI based on OpenAI’s ChatGPT and that it dropped its contract for Salesforce CRM. This news came after CEO Sebastian Siemiatkowski discussed how Klarna’s homegrown ChatGPT-powered customer service bot led to replacing 700 full-time contract employees and savings of approximately $40 million annually.
In the months since, Klarna has continued pouring capital into AI-driven services. On top of its AI-powered chatbot, the company has used AI to improve the customer authentication process and identify customer credit profiles. These advancements are expected to enhance the customer experience and streamline operations, particularly in cross-border transactions.
BNPL Outlook
The macro environment could impact the BNPL space. Thus far, growing adoption of the BNPL model has occurred even against a challenging global macro backdrop. BNPL has yet to be hit by the consumer spending squeeze that has played out in some pockets of retail, experts say.
Surging BNPL adoption has also brought regulatory scrutiny as sovereign governments aim to ensure consumers are protected. This is a particular focus in Europe due to its more stringent regulatory regime. The Dutch government is reportedly trying to curb the rollout of buy now, pay later and has asked Klarna to stop expanding its in-store offerings in the country.
What could all this mean for IPO appetite? Analysts appear cautiously optimistic about IPO activity rebounding this year, with expectations running particularly high for “AI native” software firms. Yet market sentiment could dictate how IPO activity evolves as the year progresses. Experts cite the uncertain macro environment as a potential risk to IPO activity.
