The Swedish fintech Klarna has paused its plans for an initial public offering in the US after president Donald Trump’s ‘reciprocal’ tariffs triggered a spike in market volatility.
The buy-now-pay-later company, which offers short-term, interest-free loans at online checkouts, allowing shoppers to spread payments over three instalments, filed for an IPO on 14 March. Although Klarna did not set an IPO date, it was reported that the listing might proceed in April, with analysts estimating that the flotation could value the business at around $15bn.
Once a company files IPO documents with the US Securities and Exchange Commission, bosses usually prepare to launch an investor roadshow after 15 days. As reported by the Financial Times on Friday, Klarna was planning to start its investor roadshow this week, but the listing has now been delayed indefinitely. The FT added that the company was under no obligation to float within a specific timeframe and the listing could still happen in the weeks ahead, citing people with knowledge of the matter.
Trump tariffs trigger turmoil
President Trump’s announcement last Wednesday that the US will slap imports from all countries with tariffs of at least 10% – and in many cases much more than that – sent stock markets into a tailspin.
The S&P 500 index sank 4.8% on Thursday, followed by a 6% plunge on Friday. The index’s 9.1% fall over the course of the week was the biggest decrease since the start of the coronavirus pandemic in 2020.
The market sell-off continued on Monday as Trump signalled he would not back down on the levies. Asian and European indices are down sharply today while US stock futures point to a potential further 5% drop.
At the same time, the VIX – commonly known as Wall Street’s ‘fear gauge’ – topped 60 this morning, its highest reading since last August. The index measures investor expectations of volatility in the US stock market over the coming 30 days, and a reading above 30 is typically associated with extreme volatility.
Volatility throttles IPO pipeline
Klarna’s decision to hold off on its IPO comes as a blow for the IPO market, which had started to pick up. The cloud computing company CoreWeave listed on the Nasdaq on 28 March in what was the biggest tech IPO of the year so far.
Besides Klarna, other companies have also decided to delay their IPO plans in the wake of the market volatility. The businesses taking a wait-and-see approach include the ticketing platform StubHub, which also filed IPO paperwork in March, and the healthcare company Medline, whose planned IPO could have valued the company at $50bn according to analysts. Physical therapy company Hinge Health and Israel-based trading platform eToro have also shelved their IPO plans, according to the FT.
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