Klarna faces a US class action over its 2025 IPO as the BNPL giant struggles with falling share prices and early signs of damage control
Klarna Group is facing a class action lawsuit over its initial public offering (IPO), with plaintiffs claiming the company misled investors in the offering documents.
Announced on January 2, the lawsuit titled Nayak v. Klarna Group plc, No. 25-cv-07033 (E.D.N.Y.), alleges the company, its representatives and the IPO underwriters violated the Securities Act of 1933. It seeks to represent anyone who purchased Klarna shares linked to the IPO documents.
The complaint says the Swedish fintech understated the risks tied to its buy now, pay later (BNPL) loans, particularly the likelihood its loss provisions would rise in the months after the IPO. Plaintiffs claim the company and its executives either knew or should have known about these risks at the time of the offering.
The lawsuit has highlighted a Bloomberg article from November 2025, titled “Klarna Revenue Surges Yet Longer Loans Trigger Provisions”, which reported Klarna posted a net loss of $95m. The losses were caused by the firm increasing its loan loss provisions to $235m, above analyst estimates of $215.8m.
This means by the time the class action was filed, Klarna’s stock had fallen to as low as $31.31 per share, well below its IPO price of $40, leaving early investors with significant losses.
Klarna’s IPO and share structure
Klarna went public on the New York Stock Exchange on September 10, 2025, under the ticker KLAR, selling roughly 34.3 million ordinary shares. Of these, the company offered 5.56 million new shares, with the remaining 28.76 million coming from existing investors.
Underwriters also held a 30-day option over 5.15 million additional shares and Klarna itself received proceeds only from the primary shares, amounting to around $194–206m at the IPO price of $40 per share.
The offering valued the Swedish fintech at roughly $12.8–14bn, a rebound from its 2022 down-round but a notable step down from the private-market peak it reached in 2021.
Klarna highlighted its banking operations and funding profile in the IPO documents, with customer deposits at Klarna Bank AB stood at $14bn as of June 30, 2025, with a reported liquidity coverage ratio of 1,035% and a net stable funding ratio of 204%.
Deposits were concentrated in Sweden, Germany and the Netherlands, and none in the US. Klarna said these deposits helped stabilise credit costs and support its expansion strategy.
Klarna reported a $21m net profit in 2024 on $2.81bn of revenue but swung to a $152m net loss in the first half of 2025 despite growing revenue. Second quarter 2025 revenue reached $823m, while provisioning and funding costs remained significant.
The IPO itself had been planned earlier in 2025 but was delayed in April due to market instability linked to global tariffs introduced by US President Donald Trump. Klarna had aimed for a valuation over $15bn, but concerns over a potential trade war prompted the company to hit pause until conditions stabilised.
By the time Klarna released its first quarterly results as a public company, the firm posted record revenue of around $903m for Q3 2025, with gross merchandise volume hitting $32.7bn.
However, profitability suffered, with a net loss of $95m as provisions for credit losses more than doubled to $235m. The company said the jump in provisions reflected the accounting treatment of its fast-growing “Fair Financing” loan book rather than underlying credit quality.
Signs of damage control in November
With share prices dropping, Klarna has seemingly been in damage control for some time. The first indication came in November 2025, when a Forbes article reported a supposed data leak affecting some users. The piece claimed when a customer attempted a payment, they were shown another person’s name and address instead of their own.
While Forbes later removed the story following Klarna’s denial, the coverage was picked up by Swedish national radio, which did not retract its report. However, the broadcaster wrote: “Klarna tells P3 News that it is not a leak, but a technical error that exposed data to a few users.”
Payment Expert’s own investigation found Forbes was given two conflicting statements from Klarna. The original article included a spokesperson’s comment which appeared to confirm the leak, but a day later, Forbes received a second statement denying the claims entirely.
When Payment Expert approached the BNPL provider on the matter, Klarna maintained the Forbes article was factually incorrect.
A source close to the matter told Payment Expert at the time: “They are scared, that’s why. Share price is down since their IPO, this week alone it’s gone from -19% to -22%, they are trying to contain anything that would be more bad news for them.”
