Fintech Battle: Klarna Grabs Big Affirm Customer Ahead Of IPO
Buy now, pay later firm Klarna, which filed for an initial public offering last week, has grabbed retailer Walmart (WMT) away from rival Affirm Holdings (AFRM) as a customer. Affirm stock dropped on the news.
Sweden-based Klarna has forged an exclusive deal with Walmart, according to a CNBC report. Affirm later confirmed Walmart's plans in a regulatory filing.
Affirm Stock: Regulatory Filing
In the regulatory filing on Monday, Affirm said "During the six-month period ended Dec. 31, 2024, purchases made through the company's integrated program with Walmart represented approximately 5% of the company's gross merchandise volume and approximately 2% of the company's adjusted operating income."
On Monday, Affirm stock fell 4.2% to close at 47.96. Also, Affirm stock has been pressured by worries over a U.S. recession. Shares are down over 20% in 2025.
Competition is heating up in the BNPL market. At a recent investor day, PayPal Holdings (PYPL) said it plans to be more aggressive acquiring BNPL customers.
PayPal Sets Big BNPL Push
Aside from San Francisco-based Affirm, Klarna also competes versus Block's (SQ) Afterpay, Sezzle and many other BNPL providers. Many top credit card issuers, such as Chase, now offer their own version of BNPL, creating more competition.
With BNPL options, consumers pay off purchases in monthly installments, usually with lower interest payments than credit card companies.
"We suspect that Klarna offered price concessions to Walmart to win its business," said William Blair analyst Andrew Jeffrey in a report. "We think merchants are increasingly willing to subsidize Affirm BNPL loans, owing to superior economics. This contrasts with any price concessions Klarna offered Walmart, in our view. Overall, we believe Walmart is not the best fit for Affirm's flavor of BNPL."
Jefferies analyst Trevor Williams in a report noted that according to Klarna's IPO filing, it garners the majority of revenue from merchant fees and about 25% from interest income.
At Susquehanna, analyst James Friedman said in a report: "(We) believe that OnePay's partnership with Klarna will at least include interest-bearing monthly installment loans, and potentially pay in four."
The Klarna IPO could value the fintech company at around $15 billion to $20 billion, analysts have estimated.
Started in 2005, Klarna says it has over 150 million global active users and handles 2 million transactions per day. Klarna's other retail partners include H&M, Saks, Sephora, Macy's, Ikea, Expedia Group, Nike and Airbnb.
Further, Klarna filed to go public on the NYSE.
Affirm Partners: Amazon, Shopify
Klarna booked over $2.8 billion in revenue in 2024, up 24% from nearly $2.3 billion year-over-year. It posted a net profit of $21 million over that same period, an improvement from its $244 million net loss in 2023.
Meanwhile, Affirm's partners include Amazon.com (AMZN), Shopify (SHOP) and recently iPhone maker Apple (AAPL). Affirm has been expanding from BNPL to new areas, such as a debit card.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
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