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- 1 Jan 21:00
Invest in Klarna
Klarna is a major next-generation payments system. The company has launched a platform that has become a full-fledged alternative to banks for both retail customers and business owners. It was founded in 2005 in Sweden. Klarna is used by more than 85 million private customers and 200,000 major online stores: H&M, IKEA, Expedia Group, Samsung, ASOS, Peloton, Abercrombie & Fitch, Nike, AliExpress and others.
Klarna is a buy now, pay later service made for online purchases. Klarna system is integrated into an online store, finances customers' purchases (often with a zero interest rate), and receives payment from seller's gross profit. Now Klarna has turned into a full-fledged digital wallet providing a wide range of services that include transfers, loans, brokerage services and savings management.
According to eMarketer data, the global online sales market reached $3.4 trillion in 2019. The market is expected to grow to $5.8 trillion by 2023. All stages of the commercial process are moving to the Internet – millennials and Generation Z are making more and more online purchases. However, e-commerce still accounts for only 14% of total retail sales.
Customers are increasingly choosing innovative payment solutions instead of traditional credit payment methods. According to the Worldpay Global Payments Report 2020, "buy now, pay later" is the fastest-growing online payment preference globally. In North America alone, the "buy now, pay later" market share is expected to grow threefold to account for 3% of all e-commerce payments by 2023.
If Klarna is unable to attract additional consumers and retain relationships with existing consumers and partners, it would adversely affect the company's performance.
Klarna operates in a highly competitive industry. Similar companies include Affirm, PayPal, Visa, Mastercard, and Square. If Klarna is unable to compete, it will adversely affect the company's results and future prospects.
Klarna has raised $3.7 billion from 45 venture capital investors, including Sequoia Capital, DST Global, General Atlantic, BlackRock, Visa and others. The last funding in June 2021 valued the company at $45.6 billion, close to 50% above its last valuation in March, when Klarna raised $1 billion at a valuation of $31 billion.
Klarna's revenue in 2020 was $1.3 billion, and the company grows by an average of 40% annually. The company's gross margin is at a high level of 70%. The main driver is the growth of revenue and margins in new regions (USA, UK and others).
In June 2021 Klarna said that it is looking at an initial public offering in the US within the next year or two.
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EARLY EXIT FEE
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Venture investing is very risky as they involve new or growing companies, and multifold increase in capitalization is expected. We prioritize companies at the pre-IPO stage as they already demonstrate strong financial indicators and plan to go public soon. This approach allows limiting hyper-risks related to insolvency of new companies and substantially increasing profits as compared to investors who buy shares through a subscription just before the IPO.
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To buy the OTC stocks, one would need millions of dollars. We gathered a pool of traders and investors allowing everyone interested to join similar transactions with as much as $10.
United Traders is experienced in minimizing risks but a future investor should be aware of all risk types:
- Illiquidity. There is a possibility that early exit from this investment will take more than 1 month.
- Asymmetric information. Management and current investors have access to more internal information about the company than other market participants.
- Time uncertainty. There is no information regarding next financing round or exit strategy timeframe (IPO or M&A).
- Share dilution. The issue of additional shares by a company may reduce the value of shares of existing investors.