Buy now, pay later

Good credit at Klarna

Good morning, savvy shoppers. This is your Stock Market Rundown for March 7th, 2024. Thanks for hanging out with me, once again. Let’s dig in:

TODAY’S TOP STORY: FOUR EASY PAYMENTS

Klarna isn’t a household name, but if you’re an avid online shopper, you’ll be all too familiar with it. Can’t afford that leopard-print jumpsuit at H&M, or sick pair of kicks at Nike? Just pay in four easy installments. 

As a specialist in “Buy Now, Pay Later”, Klarna connects with online retailers’ checkouts so that shoppers can defer payment, even without a credit card. The founder and now-CEO, Sebastian Siemiatkowski, met his co-founder Niklas Adalberthwas while they were working the fryer at Burger King in their hometown of Stockholm, Sweden.

In 2005, they entered their idea of a “Buy Now, Pay Later” service into the annual entrepreneurship competition at their university. They ranked last. The judges who passed on their pitch must be regretting it: Klarna now manages two million purchases a day across 45 countries.

Customers rushing to shop online during the pandemic caused a surge in popularity for “Buy Now, Pay Later” payment options, which sent Klarna’s market value soaring to a staggering $46 billion. But by 2022, the tech downturn hit, and its valuation dropped by 85%

It was a setback, but Klarna may be about to snatch victory from the jaws of defeat. It’s angling for an IPO, which could value it at $20 billion

Some critics say “Buy Now, Pay Later” makes it too easy for consumers to dig themselves into debt. But CEO Siemiatkowski doesn’t seem too worried that his customers will have a sudden onset of frugality.

As he quipped in an interview: “Once you get the snowball rolling, you can actually do quite a lot of stupid things, and the snowball will continue rolling.” Maybe that goes for stupid online purchases at 2 AM, too.

Have you ever paid for an online purchase in installments?
Was it Buy Now, Regret Later? Let us know in the comments:

SO WHAT ELSE IS GOING ON?
  • The board of WeightWatchers just lost 167 pounds. Oprah Winfrey resigned her board seat after she was labeled a hypocrite for taking weight-loss drug Ozempic. Can’t really blame Oprah for wanting a little pharmaceutical help… losing weight with willpower alone is tough when those ice cream bars in the freezer start calling your name.

  • Layoffs watch: online travel company Expedia is cutting 9% of its employees. Restructuring a workforce like trying to repack your suitcase at the end of your vacation… you may have to leave a few souvenirs behind on the hotel nightstand.

  • TJ Maxx, favorite store of wine moms on a budget, beat expectations as bargain-hunting shoppers scoured the cluttered aisles for deals. 

  • Wendy’s announced plans to start “dynamically pricing” its food, then frantically backpedaled due to social-media backlash. Apparently the burger-eating community isn’t into surge pricing for their Double Whoppers.

Time to hit the pause button for today, dear readers; see you bright and early tomorrow. Yours in capitalism, The Axe

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