Klarna delays IPO amid Trump tariffs | PaymentsSource

The turmoil that has accompanied the Trump administration’s tariffs has reportedly caused Klarna to at least temporarily pull its planned initial public offering in New York.

The Swedish financial institution, which is best known in the U.S. as a buy now/pay later lender, has delayed its IPO, according to Reuters and other media outlets. Klarna did not comment.

Any interruption in Klarna’s listing is a major blow to investors looking to Klarna’s IPO as a barometer of the larger market’s recovery. “Once the market sees that a heavily anticipated IPO like Klarna is put on hold, it has a chilling effect on other potential IPOs, and you will see other potential IPOs put on hold as well,” David Manno, a securities lawyer and partner at Sichenzia Ross Ference Carmel, told American Banker.

Klarna had planned to raise about $1 billion at a $15 billion valuation. The company in late March released its prospectus with the Securities and Exchange Commission, with the listing expected to come some time in April.

The stock market was already in a period of tariff-related churn at the time of Klarna’s announcement. The steep sell-off has accelerated over the past two days after Trump on Wednesday announced blanket tariffs in much of the world, with China announcing retaliatory tariffs on Friday.

The tariff fallout has hit numerous industries, such as auto lending, which was already under pressure due to higher prices. And while the tariffs may provide a boost for BNPL lending, it’s likely not enough to lure institutional investors given the enormity of the market downturn.  

“With the market down so much, valuations for potential IPOs will also be down, so the timing may not be right now,” Manno said. 

Before the tariff announcement, Klarna and the rest of the fintech industry had made progress from a slump in 2022 and 2023. In a research note issued this week, Victor Basta, managing partner of investment bank Artis Partners, said fintech valuations have recovered considerably in recent months, adding many of the sector’s incumbents have reached a size and prominence in their segments that makes them strategically attractive.

“We’re already seeing signs the fintech market is recovering from a dip that has lasted for several years, and a key driver of this change is the maturity of the sector in terms of embedding artificial intelligence,” Basta said.

Klarna’s use of emerging forms of AI to streamline its workflow has drawn considerable attention in the past year, along with its ability to add scale while roadshowing its IPO. Klarna has made a series of high-profile distribution deals in the U.S. ahead of its potential IPO to raise the company’s profile.

Klarna in March said it would partner with consumer finance app OnePay to offer installment loans at Walmart in the U.S. Ribbit Capital, Walmart’s partner in the retailer’s financial services venture, also financially backs OnePay.

The exclusive Walmart/Klarna BNPL partnership potentially adds millions of consumers to Klarna’s addressable market, particularly in the U.S. The Walmart/Klarna partnership additionally gives OnePay an option to take a stake in Klarna, according to CNBC, noting Klarna’s prospectus included reference to an unnamed “commercial agreement with a global partner.”

The Walmart partnership follows a February deal between Klarna and JPMorgan Chase to offer BNPL to the bank’s merchant network. That put Klarna’s installment options at the point of sale for more than 900,000 businesses through the bank’s JPMorgan Payments Commerce Solutions Platform.

Other recent Klarna distribution deals include Adyen, Apple, Staples, Worldpay and RiteAid.

Trump’s tariff announcement caused a steep decline in other parts of the financial services industry. Bank stocks, for example, fell nearly 10% Thursday. And the KBW/Nasdaq bank index was down more than 8% in trading on Friday. The pulled Klarna IPO “is not a great signal,” Aditya Narula, senior vice president and general manager of lending and credit at Bluevine, a digital banking platform for small businesses, told American Banker. “Klarna has been preparing this for a while and making lots of PR noise over the last 18 months or so.”

While the tariffs’ broader impact on the economy will be determined in the coming months, Narula said the recent market declines are causing investors to cool before Main Street.

“The tariffs’ dust must clear before companies want to complete their IPOs,” Manno said. “We are currently seeing waning investor confidence because the market is waiting to see what’s next and what other countries may do in response to the U.S. tariffs.”