watch now2:2502:25When you look at credit quality numbers, Klarna has impressive underwriting standards: Jim CramerMad Money with Jim CramerCNBC's Jim Cramer explained why he thinks newly-minted IPO Klarna is a buy even after s climbed during its first trading session."While Klarna roared right out of the gate, the stock hasn't gone to an insane valuation yet.
I think the numbers look good, so I think it can be bought at these levels," he said, with the caveat that overall, he prefers competitor Affirm.Klarna opened at $52 and saw gains on Wednesday after the the company priced its IPO above the expected range.
The Swedish online lender is known for its buy now, pay later ducts. It is the hot IPO to hit Wall Street, and the largest of several set to debut this week.
The IPO market has been booming as of late, pelling an IPO index to a 3-year high.
By close, Klarna was up 14.55%.Although known for its buy now, pay later service, Cramer noted that Klarna also has other offerings, consumer financing options and a platform that helps people track their spending.
While the bulk of the company's revenue comes from transaction and service fees, Cramer explained that it also makes money from advertising revenue, ducts its budgeting tools as well as interest payments from traditional lending.
Cramer said he was satisfied with Klarna's credit quality numbers, saying it has "impressive underwriting standards" even though that cess is automated.Overall, Cramer said Klarna has solid growth and imving fundamentals.He pointed out that the company was fitable for years before actively deciding to invest in growth in 2019, according to the spectus.
Although it has been unfitable since then, the company entered 12 new and focused on growth in the U.S.
Management also said that fitability has been imving since 2023 — and Cramer was encouraged to find that over the past few years, the company has seen strong growth and shrinking earnings losses.But Cramer said Klarna's IPO wasn't perfect.
Much of its s were sold by existing holders, not the company itself, he pointed out.
Usually, he said he'd rather see the company "get the funds and invest in growth, rather than the IPO being exit liquidity for venture capitalists." However, Cramer said that at this point, Klarna doesn't seem to need the cash.
It's also been ready to go public for years now, Cramer added, saying the 20-year-old company is "pretty seasoned, as far as startups go."Cramer was fairly optimistic the company's ability to grow its valuation, which now sits over $17 billion.
He suggested the success of Klarna's peers — namely Affirm and Sezzle — bodes well for the company."The nice thing is that we have some good publicly traded analogues," Cramer said.
"Un Klarna, those two are fitable, though, but Klarna's headed in that direction."Klarna declined to .watch now7:4907:49Klarna has solid growth and imving fitability, says Jim CramerMad Money with Jim CramerJim Cramer's Guide to Click here to download Jim Cramer's Guide to at no cost to help you build long-term wealth and invest smarter.
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