Do not buy the Klarna IPO now at max hype or you will pay later!

Klarna hits the IPO hit parade in New York on Wednesday and the grapevine suggests that the Swedish fintech IPO is oversubscribed by at least 10X. The investment bankers priced Klarna last night at $40, even above the 35-37 range where Sequoia capital, Silver Lake and lesser grandees on Sand Hill Road, Dai Nippon, Sing and Oz will now pocket a multi-billion dollar paydirt as they unload their VC shares to the public.

Klarna is valued at a tad below $15 billion. This is a compelling 50% discount to Affirm but Klarna deserves to trade as Cinderella’s val metrics will never be matched by her ugly stepsisters even in a IPO world living la vida loca.

I will not be surprised if KLAR breaks syndicate at $50-$60 tonight but do not buy the hype. I have known Klarna in the private market and still cannot pronounce CEO Sebastian’s last name LOL.

Unlike Stripe or Chime, I always thought some kind of an evil fairy Godmother haunted Sweden’s leading buy now/pay later digital neo-bank. Klarna was founded in 2005 and I did a deep dive on the BNPL model when Sebastian expanded in the US, sadly on the eve of the COVID virus, 9% inflation and the swiftest Fed monetary tightening since the Volcker era in the 1980’s. I remember how the val spiked from 10 to almost $60 billion in a matter of months amid a white hot frenzy that exceeded even the stampede to get an allocation in the doomed Ant IPO Xi had just torpedoed in China.

I will never forget the semi-insider who demanded a 75% carry for the privilege of selling us a $20 million block for which I had found a buyer in the GCC but I could not justify such extortion in the deal mania. Just as well. Bad luck hit the planned IPO again last April when Trump’s Liberation Day killed the global markets. I have seen Karna trade at a $50 billion val in the private market and flame out at $6 billion amid the draconian monetary squeeze of 2022.

True, we are on the verge of a Fed rate cut in September and October but I cannot forget that core inflation is above 3% now, so Wall Street’s Alice in Wonderland mania for hot IPOs will be vaporized by a bond market crash. Do I want to own a high growth consumer credit business with a footprint in 26 countries at the precise moment when the US economy slips into recession and Germany realizes all is not hunky dory (ok, wunderbar) in the Teutonic Fatherland as the post-Ukraine hangover now begins in the EU.

This could well be a pop now and poops later moment for the Klarna IPO as it was for CoreWeave, Figma and most relevant, Chime. So will I get another chance at a 2nd shot at Klarna at a $8 billion val this winter? I bet I will. As for any Dubai investor wanting to challenge market Gods on IPO D-Day tonight? Don’t do it, as you have better odds of tempting lady luck with a coin flip in Vegas.

We nailed Firefly Aerospace (FLY) at $9 a share in the private market as the only major then cap table investor from the GCC and were justifiably euphoric when it spiked to 80 on its IPO debut. Lock-ins are a sad fact of life in the VC/deal business and FLY then tanked to 44 as I write. This would still be a stellar 6X if the lock-in expired tonight but sadly Santa will only knock at our door next February.

Matt’s Four Commandments for white hot IPOs? Wait till the dumb money euphoria dies. Six month lock-ins expire. Only invest in deals that show profits after the first post-IPO earnings. Margins must rise even as network rev growth goes ballistic.

Even the Circle IPO is down 65% from its peak and Bullish IPO morphed into, pardon my French, Bull Merde now. Klarna revenue growth is a beauty at 812 million USD but it is in a competitive, even cut throat business. Klarna lost $52 million in Q2 2025 and I know from bitter experience that fintechs are mere boys in a world of big hairy/scary men like American Express and Paypal, let alone Big Banks in the 26 countries where Klarna now operates. When the music stops for Wall Street, how do you separate the men from the boys in the fintech universe? Answer, with a sledgehammer. In a world where even Amazon (AMZN) once lost 90% of its market value in a meltdown, why cannot I buy KLAR at $8-$10 this winter in a post-bubble clearance sale on Nasdaq?

Poor SoftBank will turn cartwheels tonight. I remember a Deal Bro/Bankerji who boasted that he could put in a good word for me with Masa-san for the privilege of joining him at a $45 billion val round in 2021 and I responded with classic Bollywood actress’s demure “nahi-nahi”.

Affirm is profitable, has a higher growth rate, a less risky and higher growth lending business than Klarna and it is as All American as Mom and Apple Pie. It is not rational to compare Affirm’s 33% growth rate, 8% network operating margins and $276 average order with Klarna’s 20% growth rate, 3% network margins and puny $101 average order. The sad truth is that Affirm is profitable and Klarna is not. If you buy Klarna tonight at max-hype, you will pay later.