Jim Cramer Sees Value in Klarna IPO Despite Recent Gains

Jim Cramer Endorses Klarna as a Buy Despite IPO Pop

Financial commentator Jim Cramer expressed confidence in the recent Klarna IPO, recommending the stock as a buy even after its shares surged during the initial trading session. Klarna, a Swedish fintech firm known for its buy now, pay later service, opened at $52 and closed up 14.55%, exceeding the expected pricing range.

Cramer emphasized that despite the strong debut, Klarna’s valuation remains reasonable. He noted the company’s diversified revenue streams, which include transaction and service fees, advertising income, consumer financing, and interest from traditional lending products. He also praised Klarna’s credit underwriting standards, describing them as “impressive” despite being automated.

Growth and Profitability Trajectory

According to Cramer, Klarna demonstrated profitability prior to 2019, after which it shifted focus toward growth by expanding into 12 new markets, including a significant push in the U.S. Although unprofitable since that strategic pivot, the company has shown signs of improving fundamentals and narrowing earnings losses since 2023.

Cramer highlighted that Klarna’s IPO was predominantly an exit for existing shareholders rather than a capital raise for the company. While this is typically less ideal, he noted Klarna appears financially stable and ready for public markets, having been a private entity for two decades.

Competitive Landscape and Market Outlook

Cramer expressed cautious optimism about Klarna’s valuation growth, referencing profitable peers Affirm and Sezzle as positive comparables. He acknowledged a preference for Affirm but believes Klarna is on a similar trajectory toward profitability.

Despite the enthusiastic outlook, Klarna declined to comment on Cramer’s analysis.