Klarna, the Swedish “buy now, pay later” pioneer, reported its fifth consecutive annual loss yesterday as it prepares for a potential US initial public offering later this year. The fintech revealed that its annual losses decreased from SKr10.4bn ($1bn) in 2022 to SKr3.2bn for 2023. Total revenues increased by 22 per cent to SKr23.5bn. It also reported its first full-year profit in the US amounting to SKr1.4bn, up from a loss of SKr900mn in 2022.
Founded in 2005, Klarna was once celebrated as a prominent success story of the fintech boom, owing to its interest-free BNPL model that allows customers to defer payments or split them into instalments. However, it faced setbacks in the wake of higher interest rates, leading to a significant decline in Klarna’s valuation — from $46bn in June 2021 to just $6.7bn a little over a year later.
Klarna’s losses follow reports of a boardroom dispute earlier this month that revealed tensions at Sequoia Capital, Klarna’s primary shareholder, casting doubt on the fintech’s governance. Sequoia initially sought the resignation of its former partner and current Klarna chair, Michael Moritz. However, within a few days, the venture capital firm changed its position and opted to replace its own board representative instead.
As reported by Bloomberg earlier this week, Klarna has entered into discussions with investment banks to work on an IPO that could occur as early as the third quarter of this year. According to Bloomberg, sources familiar with the matter said that Klarna is seeking a valuation of around $20bn, which could make it one of the biggest listings of the year.
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Sweden’s economy performed worse in the last quarter of 2023 than analysts had expected, challenging the narrative that the largest Nordic nation had successfully pulled itself out of a brief recession.
Figures released today by Statistics Sweden revealed that the country’s gross domestic product declined by 0.1 per cent in the last three months of 2023, marking the third consecutive quarter of decline. Analysts had predicted a 0.1 per cent growth.
The largest Nordic economy has been one of the hardest hit in western Europe by rising borrowing costs. Many Swedish households have large debts with interest rates fixed on short terms, which has led to lower consumer spending. Housing valuations have decreased and construction of new homes has plunged significantly. Despite weak domestic demand, the country’s export sector is benefiting from a weaker krona, partially mitigating the overall economic impact.
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The Securities and Exchange Commission will vote on March 6 on whether to implement regulations mandating US-listed companies to disclose climate-related risks, the regulator said in a notice on Wednesday.
The proposed SEC rules intend to standardise climate-related company disclosures related to details on greenhouse gas emissions, risks and their financial commitments directed towards the transition to a low-carbon economy. Initially discussed two years ago, the proposed ruling aligns with President Joe Biden’s agenda to do more to address climate risks through federal agencies. At present, there are no consistent standards for climate-related disclosures in US securities regulations.
The SEC has yet to publish the full text of the final rules. However, Bloomberg Law reported that the SEC has abandoned proposed requirements for large companies to report their Scope 3 emissions. According to analysis from Deloitte, Scope 3 emissions, originating from indirect sources such as supply chains, often account for more than 70 per cent of most businesses’ carbon footprint.
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Morgan Stanley has announced that it will open an office in Abu Dhabi. The Wall Street bank already has offices in neighbouring Dubai, as well as in Saudi Arabia and Qatar.
As reported by Reuters, global banks are expanding their presence in the UAE’s capital, which is home to three sovereign wealth funds and an increasingly diverse investor base of affluent individuals, hedge funds and alternative investments.
Morgan Stanley follows Goldman Sachs’ and JPMorgan’s 2023 expansion into Abu Dhabi's financial centre, Abu Dhabi Global Market, which itself has announced plans to expand significantly to support the growth of the UAE’s financial sector.
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Bitcoin has reached $60,000 for the first time since November 2021, bringing the cryptocurrency close to a potential new record high. Investors are flocking to the cryptocurrency in anticipation of the upcoming bitcoin “halving” event scheduled for April, during which the number of new bitcoins entering the market will be permanently reduced by 50 per cent.
The halving aims to slow the release of bitcoin, as its total supply is capped at 21mn tokens, with 19mn already in circulation. Currently, around 900 new Bitcoin tokens are generated daily, but this is set to decrease to 450. The introduction and regulatory approval of bitcoin exchange traded products in the US earlier this year have also played a significant role in rekindling investor enthusiasm for the cryptocurrency.
