Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Equity Capital Markets

<ul>
<li>Klarna Group, a founder-led BNPL giant and leading fintech company, will try to make another one IPO push in the second half of the year.</li>
<li>With the most recent F-1/A, the company reported worse-than-expected 1Q25 results, including total revenue of $701M (+9% YoY) and operating loss of $90M, up ~221% YoY.</li>
<li>Klarna Group 1Q net loss nearly tripled to ~$101M on mid-single-digit GMV growth, weaker-than-expected interest income and high SBC expense (~8% of revenues).</li>
</ul>


Klarna Group, a founder-led BNPL giant and leading fintech company, will try to make another one IPO push in the second half of the year.
With the most recent F-1/A, the company reported worse-than-expected 1Q25 results, including total revenue of $701M (+9% YoY) and operating loss of $90M, up ~221% YoY.
Klarna Group 1Q net loss nearly tripled to ~$101M on mid-single-digit GMV growth, weaker-than-expected interest income and high SBC expense (~8% of revenues).


Klarna IPO Update: Earnings Recap/Estimate Changes, 1Q25 Net Loss Widened to ~$101M

<ul>
<li>Klarna, a leading BNPL player in Europe, will try to push ahead with IPO in the second half of the year. The fintech unicorn plans to raise up to ~$1B.</li>
<li>Klarna picked a not great time to take the company public, keeping in mind negative impact of Trump’s tariffs on BNPL players in the U.S. and European Union.</li>
<li>I believe the company may price its IPO above last round valuation of ~$6.7B led by Sequoia Capital, Silver Lake, CPPIB, and Mubadala Investment Company, among others.</li>
</ul>


Klarna, a leading BNPL player in Europe, will try to push ahead with IPO in the second half of the year. The fintech unicorn plans to raise up to ~$1B.
Klarna picked a not great time to take the company public, keeping in mind negative impact of Trump’s tariffs on BNPL players in the U.S. and European Union.
I believe the company may price its IPO above last round valuation of ~$6.7B led by Sequoia Capital, Silver Lake, CPPIB, and Mubadala Investment Company, among others.


Klarna IPO Valuation Analysis: Don’t Expect a Premium Multiple Relative to Affirm Holdings

<ul>
<li>Klarna Group, a Swedish fintech company and BNPL provider, filed for an IPO and submitted a registration statement F-1 form with the SEC.</li>
<li>The company believes that AI and product diversification will boost profitability in the coming years coupled with aggressive cost-cutting and better underwriting process.</li>
<li>However, Klarna delayed its planned IPO due to extreme volatility and Trump’s tariffs, which are a headwind for BNPL players, including Affirm and Klarna.</li>
</ul>


Klarna Group, a Swedish fintech company and BNPL provider, filed for an IPO and submitted a registration statement F-1 form with the SEC.
The company believes that AI and product diversification will boost profitability in the coming years coupled with aggressive cost-cutting and better underwriting process.
However, Klarna delayed its planned IPO due to extreme volatility and Trump’s tariffs, which are a headwind for BNPL players, including Affirm and Klarna.


Klarna IPO Preview: The Dominant BNPL Player in Europe, Trump’s Tariffs Are a Headwind

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Thematic (Sector/Industry)

<ul>
<li>We update Klarna’s pre-IPO valuation based on recent private share transactions and that of Stripe; Indian payments company Pine Labs is reputedly looking for an IPO valuation of USD6bn</li>
<li>Our 2H24 recommended shares performance was suboptimal; only two of our four longs delivered gains, and our short’s share price was strong in the “risk on” investor climate</li>
<li>We downgrade Shift4 to neutral, keeping PagSeguro as our core value pick along with European value play Nexi and US megacap Visa; we keep our sell rating on Affirm</li>
</ul>


We update Klarna’s pre-IPO valuation based on recent private share transactions and that of Stripe; Indian payments company Pine Labs is reputedly looking for an IPO valuation of USD6bn
Our 2H24 recommended shares performance was suboptimal; only two of our four longs delivered gains, and our short’s share price was strong in the “risk on” investor climate
We downgrade Shift4 to neutral, keeping PagSeguro as our core value pick along with European value play Nexi and US megacap Visa; we keep our sell rating on Affirm


Payment Companies – Key Picks and Potential IPOs in Focus

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Our outlook remains bullish following the S&amp;P 500's multi-month base breakout above 5670, alongside healthy market dynamics which have continued to improve.</li>
<li>Two weeks ago, our election day report (11/5/24) was titled "Buy the Pullback," and with the SPX/QQQ/IWM pulling back to their 20-day MAs, it's time to buy the pullback <em>again</em>.</li>
<li>We continue to expect significant upside into year-end and early 2025, and we expect support at the 20-day MAs on the aforementioned indexes (though support at 50-day MAs is possible).</li>
</ul>


Our outlook remains bullish following the S&amp;P 500's multi-month base breakout above 5670, alongside healthy market dynamics which have continued to improve.
Two weeks ago, our election day report (11/5/24) was titled "Buy the Pullback," and with the SPX/QQQ/IWM pulling back to their 20-day MAs, it's time to buy the pullback again.
We continue to expect significant upside into year-end and early 2025, and we expect support at the 20-day MAs on the aforementioned indexes (though support at 50-day MAs is possible).


Buy the Pullback Again; S&P 500, Nasdaq 100, Russell 2000 Testing Confluence of Support

United States

Affirm Holdings, Inc. is a financial technology company. The Company builds platform for digital and mobile-first commerce. Affirm Holdings offers financial services tool that allows consumers to purchase goods and services. Affirm Holdings serves customers worldwide.

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Affirm Holdings (AFRM US)

Klarna IPO Update: Earnings Recap/Estimate Changes, 1Q25 Net Loss Widened to ~$101M

Founder-led BNPL giant Klarna Group plans another IPO push in H2 2025 despite worse-than-expected 1Q25 results, including a widened net loss of...

Andrei Zakharov

Klarna IPO Valuation Analysis: Don’t Expect a Premium Multiple Relative to Affirm Holdings

Klarna plans to move forward with IPO despite potential challenges from Trump's tariffs, aiming to raise up to ~$1B and possibly price the...

Andrei Zakharov

Klarna IPO Preview: The Dominant BNPL Player in Europe, Trump’s Tariffs Are a Headwind

Klarna, a Swedish fintech player and the dominant BNPL player in Europe, plans to raise up to $1B in US IPO. I’m cautious about buying into...

Andrei Zakharov

Payment Companies – Key Picks and Potential IPOs in Focus

PagSeguro is our core value pick, Nexi and Visa are also buys, Affirm still rated a sell, Shift4 is now neutral. Updated Klarna and Stripe pre-IPO...

Victor Galliano

Buy the Pullback Again; S&P 500, Nasdaq 100, Russell 2000 Testing Confluence of Support

Buy the Pullback Again, Same as Our Election Day Report; S&P 500 $SPX, Nasdaq 100 $QQQ, Russell 2000 $IWM Testing Confluence of Support at 20-day...

Vermilion Research

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Klarna IPO Update: Earnings Recap/Estimate Changes, 1Q25 Net Loss Widened to ~$101M

​Founder-led BNPL giant Klarna Group plans another IPO push in H2 2025 despite worse-than-expected 1Q25 results, including a widened net loss of...

Andrei Zakharov

Klarna IPO Valuation Analysis: Don’t Expect a Premium Multiple Relative to Affirm Holdings

​Klarna plans to move forward with IPO despite potential challenges from Trump's tariffs, aiming to raise up to ~$1B and possibly price the...

Andrei Zakharov

Klarna IPO Preview: The Dominant BNPL Player in Europe, Trump’s Tariffs Are a Headwind

Klarna, a Swedish fintech player and the dominant BNPL player in Europe, plans to raise up to $1B in US IPO. I’m cautious about buying into...

Andrei Zakharov

Payment Companies – Key Picks and Potential IPOs in Focus

PagSeguro is our core value pick, Nexi and Visa are also buys, Affirm still rated a sell, Shift4 is now neutral. ​Updated Klarna and Stripe pre-IPO...

Victor Galliano

Buy the Pullback Again; S&P 500, Nasdaq 100, Russell 2000 Testing Confluence of Support

Buy the Pullback Again, Same as Our Election Day Report; S&P 500 $SPX, Nasdaq 100 $QQQ, Russell 2000 $IWM Testing Confluence of Support at 20-day...

Vermilion Research

Founder-led BNPL giant Klarna Group plans another IPO push in H2 2025 despite worse-than-expected 1Q25 results, including a widened net loss of...

Klarna plans to move forward with IPO despite potential challenges from Trump's tariffs, aiming to raise up to ~$1B and possibly price the...

PagSeguro is our core value pick, Nexi and Visa are also buys, Affirm still rated a sell, Shift4 is now neutral. Updated Klarna and Stripe pre-IPO...