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Affirm Holdings (NASDAQ:AFRM) took a 9.5% hit at 9.31am today after Klarna filed for its U.S. IPO, ramping up the pressure in the already competitive buy now, pay later (BNPL) space. Klarna's comeback is seriousafter a steep 85% drop in valuation in 2022, it's now bouncing back, with a projected valuation of $15 billion, fueled by profitability in 2023. The move to go public is a game-changer, and it directly challenges Affirm's position in the U.S., where Klarna will be vying for a bigger slice of the BNPL pie alongside Affirm and Block's Afterpay.
The timing couldn't be worse for Affirm, which has seen its stock fall 38% in the last month. Block (NYSE:XYZ), which acquired Afterpay in 2022, isn't faring much better either, dropping 32% in the same period. Affirm, which has already been feeling the heat, now has to contend with Klarna's IPO and Block's push to integrate Afterpay into its Cash App. The market is shifting, and these BNPL giants are scrambling to secure their positions before Klarna makes its move in the U.S.
Klarna's filing for an IPO under ticker KLAR is a bold play that adds even more volatility to an already competitive market. As Affirm and Block scramble to expand their product portfolios, Klarna's entry into the U.S. market will force all of them to step up their game. Expect a heated battle on pricing and incentives, as each of these players pushes hard to capture more of the consumer wallet. The BNPL market is far from settled, and Klarna's IPO only raises the stakes.
This article first appeared on GuruFocus.