Klarna’s IPO Is on Thin Ice as Q1 Losses Double to $99 Million

Klarna is slamming the brakes on its much-hyped U.S. IPO after a bruising first quarter that saw losses more than double. The Swedish fintech powerhouse posted a net loss of $99 million for Q1 2025—up sharply from the $47 million loss it reported a year earlier.

One-Off Costs and AI Misfires Weigh Heavily on Klarna

The company blamed the red ink on several one-off costs, including depreciation, share-based payments, and restructuring. Consumer credit losses also jumped 17% to $136 million, underscoring growing repayment challenges in a jittery economic climate.

Klarna had gone all-in on AI, replacing nearly 700 customer service reps with automated tools powered by OpenAI. While this cut service costs by 40%, it came at the expense of user experience. Customer complaints surged, and now Klarna is rehiring humans to strike a balance between efficiency and empathy.

Klarna’s Revenue Is Up, but its IPO Dreams Are on Hold

Despite the losses, revenue rose 13% year-over-year to $701 million, fueled by U.S. growth and new partnerships with heavyweights like Walmart, DoorDash, and eBay. Klarna also expanded its global footprint, now boasting 100 million active users and 724,000 merchant partners.

Still, market turmoil triggered by President Trump’s sweeping tariff moves has forced Klarna to hit pause on its IPO, which had once aimed to fetch a $15 billion valuation. Filed in March and iced in April, the listing remains in limbo until calmer times return.

After internal turbulence and external skepticism, the company seems focused on striking a smarter balance between automation and human support.

Is AFRM a Good Stock to Buy?

While Klarna remains privately held, investors eyeing the buy now, pay later space often turn to its major rival, Affirm Holdings (AFRM). AFRM currently holds a Strong Buy consensus from 21 Wall Street analysts, based on 16 Buy ratings and five Holds over the past three months. The average AFRM price target stands at $66.53, suggesting a potential upside of 34% from its current trading level.

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