All Investment Ideas
$890M$1.3B

Klarna

Global fintech company
Pre-IPO
Medium risk

Estimated revenue in 2019-2020

Invest in Klarna

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Investment Idea Details
About the company

Klarna is one of the major payment systems of the next generation. The company has launched a platform that has become a full-fledged alternative to banks for both retail customers and business owners. The company was founded in 2005 in Sweden. Klarna is used by more than 85 million private customers and 200 thousand major online stores: H&M, IKEA, Expedia Group, Samsung, ASOS, Peloton, Abercrombie & Fitch, Nike, AliExpress and others.

Klarna was initially created as a platform for online shopping on credit. The Klarna system is integrated into an online store, finances customers' purchases (often with a zero interest rate), and receives payment from the seller's gross profit. Now Klarna has turned into a full-fledged digital wallet providing a wide range of services that include transfers, loans, brokerage services and savings management.

Market Opportunities

According to eMarketer data, the global online sales market reached $3.4 trillion in 2019. The market is expected to grow to $5.8 trillion by 2023. All stages of the commercial process are moving to the Internet - millennials and Generation Z are making more and more online purchases. However, e-commerce still accounts for only 14% of total retail sales.

Customers are increasingly choosing innovative payment solutions instead of traditional credit payment methods. According to the Worldpay Global Payments Report 2020, "buy now, pay later" is the fastest-growing online payment preference globally. In North America alone, the "buy now, pay later" market share is expected to grow 3-fold to account for 3% of all e-commerce payments by 2023.

Risks

If Klarna is unable to attract additional consumers and retain relationships with existing consumers and partners, it would adversely affect the company's performance.

Klarna operates in a highly competitive industry. Similar companies include Affirm, PayPal, Visa, Mastercard, and Square. If Klarna is unable to compete, it will adversely affect the company's results and future prospects.

There is a chance that after the lockup period (6 months after the IPO) we’ll need much time to transfer Klarna shares to our brokerage account. The process usually takes two weeks, however, delays are possible due to some legal procedures that are hard to foresee in terms of their duration.

Financials and Valuation

Klarna has raised $3.1 billion from 45 venture capital investors, including Sequoia Capital, DST Global, General Atlantic, Blackrock, Visa and others. The last investment round took place in March 2021. The company raised $1 billion at a valuation of $31 billion.

Klarna shares are worth $1 606 on the OTC market, which corresponds to a valuation of $40 billion. This company can be compared to Affirm (AFRM). Affirm went public in early 2021 and is now trading at P/S of 29x. The market capitalization of the company is $18 billion.

Klarna's revenue in 2020 was $1.3 billion, and the company grows by an average of 40% annually. The company's gross margin is at a high level of 70%. The main driver is the growth of revenue and margins in new regions (USA, UK and others). The projected equity value of Klarna on the public market will be $65-75 billion after an IPO. The expected date of listing on the exchange is late 2021 - early 2022. Given the rapid market growth and Klarna's financials, the expected return on investment is 70%.

How Venture Investments Work
1. Searching for Companies

United Traders analysts are in continuous search for OTC offers studying financial reporting, companies’ businesses, their future plans, analyzing them as potential acquisition targets or estimating prospective multifold capitalization increase as well as considering risks that may hinder business growth. The best ideas are offered to our investors.

Publication
06 Apr
Minimum Amount
$17
2. Buying shares

As part of our service for purchasing shares on the OTC market, for its traders and investors United Traders buys units in funds that own equity stakes in private companies. These funds make early-stage investments in private companies or acquire equity stakes from employees of such companies.

Shares Outstanding
Limited
3. Public Offering

United Traders will have shares at its disposal after the IPO. The shares can be sold after the established 6-month Lock-up period. Alternatively, the shares can be hedged for the above period. Prior to the company going public United Traders look for exit options in the OTC market. If we find a great offer, we sell the shares.

Public Offering Date
Pending
Estimated Gains
+70%
4. Taking profit

After the Lock-up period is over, the investment position will be automatically closed, and generated profits are credited to your account less the applicable UT fees. We offer an opportunity for investors with over $100,000 invested in a specific idea to search for a counterpart in the OTC market individually and to take profits before the company goes public and thereby exiting the trade prior to the Lock-up period expiration.

Exit
̴ 2022
Early Exit

Although it is prohibited to sell shares within the Lock-Up period, our traders find ways to take profits for our investors using various financial instruments: forwards, options, short selling trades, etc.

For an investor the above means that the investment may be exited after paying a portion of its value, usually around 15% which is caused by highly-priced instruments used to close the position. To do so, you should press the respective button in your members area as soon as it becomes active.

The exiting process is similar to making a new investment. You submit a request, we execute it within 1 business day, and your investment is closed at the current exchange price.

Fees

ENTRY FEE

3.5% of the share purchase amount. The fee is charged at confirmation of your investment bid.

EXIT FEE

0.5% of the share sell amount after the trade. The fee is charged at the investment exit.

SUCCESS FEE

20% of the profit gain. The fee is charged only if the trade is profitable at the time of exiting.

EARLY EXIT FEE

Usually a 15% fee is charged subject to the actual situation at the exchange. The fee is calculated individually for each investment.

What Are the Benefits of Investing with United Traders?

WE ARE A RELIABLE PARTNER

Our risk managers will support you throughout the entire transaction life.

HIGH PROFITABILITY

Venture investing is very risky as they involve new or growing companies, and multifold increase in capitalization is expected. We select companies that already demonstrate strong financials and plan to go public soon. This approach allows limiting hyper-risks related to insolvency of new companies and substantially increasing profits as compared to investors who buy shares in a pre-IPO subscription.

LOW ENTRY THRESHOLD

To qualify for a pre-IPO subscription, one would need millions of dollars. We gathered a pool of traders and investors allowing everyone interested to join similar transactions with as much as $15.

Risks

United Traders is experienced in minimizing risks but a future investor should be aware of all risk types:

  • Illiquidity. There is a possibility that early exit from this investment will take more than 1 month.
  • Asymmetric information. Management and current investors have access to more internal information about the company than other market participants.
  • Time uncertainty. There is no information regarding next financing round or exit strategy timeframe (IPO or M&A).
  • Share dilution. The issue of additional shares by a company may reduce the value of shares of existing investors.

Invest in Klarna

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