Tonight's IPO pricing! The valuation of "European Huabei" is only half that of "American Huabei," attracting strong market attention

"European Huabei," Swedish buy now pay later giant Klarna will complete its IPO pricing tonight, with a valuation of $14 billion, which is only half that of its American competitor, "American Huabei" Affirm Holdings. This significant discount is attracting a large number of investors. On September 8, it was reported that Klarna's issuance of 34.3 million shares was oversubscribed by at least 8 times, with over 80% of the shares sold by early investors. Strong demand has pushed the underwriting syndicate to adjust the IPO pricing guidance to $37, reaching the top of the range, and possibly even higher. Despite the strong demand, Klarna's $14 billion valuation is still far below Affirm's current market value of over $28 billion. The two companies reported similar revenues in the latest quarter, but Affirm is growing faster and is more profitable, with its stock price rising over 40% this year. This IPO comes at a time when fintech stocks are regaining favor, with expectations of interest rate cuts in the U.S. and a friendlier regulatory environment injecting new optimism into the sector. Business Model Differences Create Valuation Divergence Although Klarna and Affirm both focus on buy now pay later services, there are key differences in their business models. Klarna primarily offers small short-term loans, the most common form being consumers paying 30 days after purchase, with an average order value of $101. In contrast, Affirm targets larger purchases, offering long-term interest-free options and not charging late fees, with an average order value of $276 in the latest quarter. In the three months ending June 30, 2025, Klarna's revenue grew 21% year-on-year to $823 million, accounting for less than 3% of the $31.2 billion total merchandise volume on its platform during the same period. Affirm's revenue grew 33% year-on-year to $876 million, generating about 8% of its revenue from $10.4 billion in merchandise sold through its loan products. Rohit Kulkarni, a senior research analyst at Roth Capital Markets, stated: "I don't think Klarna should trade at the same valuation multiple as Affirm at any time in the near future, but it can be said that Klarna's discount relative to Affirm is attractive for IPO investors." Bloomberg Intelligence analyst Diksha Gera estimates Klarna's value to be between $12 billion and $16 billion based on a forward gross profit multiple of 11-14 times and a growth expectation of about 12% in 2025. It is worth noting that Klarna is currently leading its competitors in the adoption rate of buy now pay later services. Statistics show that this 20-year-old company saw its monthly active users grow by more than double in August year-on-year, outpacing buy now pay later companies, far exceeding Affirm's 27% growth. The buy now pay later service is targeting a market of over $1 trillion as an alternative to traditional bank credit cards. Klarna's management stated during the IPO roadshow, Compared to competitors like Capital One Financial, Affirm, American Express, and PayPal, the company has a more diversified and sustainable revenue model, maintaining a more balanced ratio between charging consumers and merchants, with advertising revenue also on the rise. Interest Rate Cut Expectations Boost Industry Outlook Dan Dolev, a senior fintech analyst at Mizuho Securities, pointed out that interest rate cuts will lower financing costs, alleviate the underwriting pressure on buy-now-pay-later companies, and support transaction volume growth. However, he also warned that if the labor market continues to deteriorate, demand for loans will decline. Klarna's IPO was initially delayed due to tariff-driven volatility and is the latest member of this year's busy listing season in the fintech sector, set to become the largest IPO in the sector since Chime Financial raised $864 million in June. Chime's stock rose 37.4% on its first day, but early enthusiasm has waned, and the stock price is currently below the offering price. Bloomberg Intelligence analyst Gera noted: "Klarna's IPO could continue the momentum of new banks like Chime and stablecoin issuer Circle, establishing key benchmarks, especially for European peers like Revolut and Monzo considering a listing in the U.S. Its success will re-accelerate fintech issuance and validate the prospects of the buy-now-pay-later industry."