Klarna $KLAR has received approval to offer a "buy now, pay later" (BNPL) option for investors who want to participate in the offering and pay for their shares over three to nine months, depending on their credit score.
"The IPO market has been volatile, but we have received overwhelming interest in our upcoming IPO, much of it from individuals who rely heavily on BNPL to manage their finances. We are pleased to bring this "everybody wins" structure to our IPO so that all investors can participate, we can add to our growth in transaction volume, and our deal gets done."
Goldman $GS CEO David Solomon added his support, noting that public listings have been "a tougher sell" due partly to robust private markets for large companies like Stripe. But he added that "less successful, money-losing companies are still eager to tap public markets."
Klarna is also working with Robinhood $HOOD on a structure for BNPL to be offered on any future IPO. After testing BNPL on the Klarna deal it's expected to expand to other retail platforms like ETrade, Charles Schwab and Fidelity.
Vladimir Tenev, Robinhood CEO, stated, "We are proud to be working with Klarna to finally bring some innovation to IPO Markets. Our clients are eager to own stakes in the next generation of leading companies and shouldn't be left out just because they don't have the cash to buy them."
Retail investors on Reddit $RDDT echoed the sentiment. "This will create a whole new path for traders who can buy an IPO with no money down and flip it for a big profit even before the first payment is due!" crowed StonkMoonMan.
Critics have whined that this creates even more hidden leverage in financial markets and adds risk for investors who may find their IPO stocks trade much lower than the offering price over the course of their payment plan.
Proponents shouted them down, noting that "they are just getting started" and plan to wrap new IPO issues with 2x and 3x single-stock ETFs that will also allow BNPL as a payment option.
