FinTech Roundup: Klarna's Mixed Bag, Stripe's Valuation Boost & Women and the Great Wealth Transfer ??
It’s a mixed bag at Klarna, Stripe gets a valuation boost, and the long-term impact of the Great Wealth Transfer is laid bare.
Klarna, the leader of the buy-now, pay-later revolution, recently hit the market with mixed news. On the positive side, the company announced gross profits of $1.1 billion for 2023, a 22% increase in turnover to $2.2 billion, and reduced losses of $245 million. An increase in retailer payments also helped offset higher interest payments to customers holding funds in the company’s banking division. So far, so good!
Unfortunately, CEO Sebastian Siemiatkowski and the company’s largest shareholder, Sequoia Capital, are still at loggerheads. While Sequoia Capital backtracked after recently demanding management changes, internal bickering is not what investors wish to see. This brings us to the much-rumored IPO - is the company officially in talks to float?
Using the valuation multiple of listed competitor Affirm Holdings, a Klarna IPO would be valued at $20 billion. Although this is less than half the $45.6 billion peak in 2021, it is still a significant improvement on the $6.7 billion valuation after the tech bubble imploded.
While management/shareholder friction is not helpful, is it time for the buy-now, pay-later revolutionary to get ahead of the regulatory curve? Rumor has it that US, UK, and European regulators are hot on their tail.
Employees of payment tech giant Stripe have been offered the opportunity to sell shares at a $65 billion valuation, a 30% increase from last year. In a further show of confidence, a range of investors, including Goldman Sachs and Sequoia Capital, will acquire the shares as part of a tender offer.
As the company waits for the opportune moment to launch its IPO, this latest move offers employees a welcome degree of liquidity. In a reflection of the growing confidence in the FinTech sector, today’s valuation of $65 billion may be some way off the 2021 peak of $95 billion, but it is $15 billion up on the valuation just a year ago.
Stripe's services were traditionally delivered through technology partners, but in a change of tack, the company is now looking to work directly with online retailers. This is an interesting adjustment to the company's original business model, and it will be interesting to see what the future holds.
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A recent US-based survey showed that 94% of women believe their economic power is being underestimated. Due to the Great Wealth Transfer, it is also forecasted that women will hold the majority of wealth in the US (and globally) - set to receive tens of trillions of dollars over the next few decades!
We are entering a new era, a world of significant wealth transfer, with the WealthTech industry set to play a prominent role. However, adapting market strategies to this new playing field might not be as easy as you think.
It seems that different demographics have very different plans for future lump-sum payments:
Currently, just 38% of women in the US have a financial advisor who can help them with future wealth transfers, with many concerned about the lack of women financial advisors. Historical stereotypes are being rewritten, there is a shift in financial power, and the wealth industry will need to adapt.
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