Klarna

Klarna is massive. This year, Klarna's platform reached 100 million users. More than Venmo. More than Chime. More than Affirm. More than Wells Fargo.

If you think Klarna is a BNPL company, you're mistaken. Klarna is a financial ecosystem, richer than Apple's hardware ecosystem. Step inside Klarna'a mobile app and enter a world of financial possibilities: buy stock, open a savings account, shop with exclusive discounts. Step outside the app and enter any of 1,800 travel lounges around the world. Read the New Yorker with your included subscription while you wait for your flight. And of course, if you end up traveling abroad, forget exchange fees. Klarna is build an American Express competitor, quietly gaining a foothold in the market for top-tier crdit consumers.

Modeling It Forward

Modeling future cash flows depends entirely on how average revenue per user is projected forward. Right now, Klarna's ARPU hovers around $30. But digital banks like Chime or Nubank are much higher.

Multiplying Klarna's projected user bases against bear, base, and bull cases for ARPU growth provides range of potential future revenue from which to calculate cash flows.

Even assuming a conservative adjusted operating margin of 10%, Klarna could be generating $1B in earnings by 2028. For a company that is growing at double digit percentage points, led by a founder and CEO with a 20+ year track record (15+ of which were profitable), a $7B price tag feels like a bargain.