Klarna Puts Public Listing on Ice and Signals a Chill Ahead for FinTech IPOs

To get a sense of just how volatile the markets are — and how fragile things will be for FinTechs looking to go public, or for those already trading — Klarna has taken its IPO off the table, three weeks after filing its paperwork with the Securities and Exchange Commission.

A lot can happen in 21 days, and certainly a lot has. Within the buy now, pay later (BNPL) space, stocks have been clobbered, down double digits in Friday’s trading action, off the heels of a horrific post-tariff announcement Thursday. Affirm’s stock is off 44% year to date as of mid-day Friday; Sezzle shares have lost 35% over that same timeframe.

Certainly, the stock performance of peers may have forced second thoughts amid Klarna’s top brass, but beyond that volatility, there are some larger concerns: The same Friday (April 4) that Klarna paused its initial public offering (IPO), Fed Chairman Jerome Powell remarked that the tariffs set in motion by the Trump administration this week, and the retaliatory tariffs from the likes of China, would stoke inflation and hit economic growth.

Those twin pressures present a conundrum for lenders, and for BNPL firms, especially. PYMNTS Intelligence noted just this week that even affluent shoppers have been leveraging that payment option when eyeing the ways they can go ahead and buy luxury goods. Pay-later loans totaled $175 billion last year. More shoppers were using BNPL, as our data indicated that 1 in 3 American consumers, or 38%, used the payment method as 2024 came to a close, up from 24% in the prior year.

But: Should consumers throttle spending overall, then growth slows, and, traditionally, with nascent firms — innovators such as Klarna — investors pay up for growth in the top line in the absence of a prolonged history of operating profits. We noted in our own coverage of the financials detailed in the F-1 filing last month that operating losses had been widening at the company.

Listing shares amid this level of volatility is a heightened gamble, as stock is used as currency for other corporate actions, where the funds raised — a reported $1 billion — would be in the coffers; shares also can be used in mergers (stock for stock deals). The fact that Klarna has paused its listing, which had been rumored to take place as early as next week, hints that management wants some dust to settle before moving ahead with a listing.

Last month, the conventional wisdom had been that the Klarna kickoff would pave the way for other FinTechs to move ahead with their own IPOs. No such luck: Chime has delayed its own IPO as of Friday after reportedly filing its confidential documents a week ago with the SEC.

All of this darkened the picture — at least for now — for the FinTech sector, and particularly for the smaller firms that have been mainstays of our FinTech IPO Index. As of Thursday, and even with the day’s market rout, the Index we’ve created was up 40% through the past year. But on an absolute basis, the majority of names we track are busted IPOs, meaning that they trade below their offer prices. We’re reposting the chart below for reference.

The tariff back and forth may claim additional casualties, and a chief form of capital that has been a critical lifeline for FinTechs: Tech startups rely on venture capital and private equity dollars to go from bootstrapping to strappingly large enterprises. Investors at those firms, of course, look to eventual IPOs as an exit strategy, and to cash out their stakes at higher multiples.

Last month, stats from S&P Global Market Intelligence indicated that the FinTech industry attracted $21.5 billion in VC funding in 2024, the lowest level of funding since 2016.  With the shock and awe of the last few trading days, there’s little at the moment proving persuasive that the VC spigots will loosen.

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