During the pandemic, e-commerce platform Shopify (US:SHOP) became a darling lockdown stock. Its share price trebled between early 2020 and late 2021, before collapsing when interest rates were increased and pandemic restrictions were eased. This prompted management to pursue an aggressive restructuring plan, which is now showing its effect with free cash flow expanding quickly. Investors came back too, sending the share price up 50 per cent in the past year.
The interest in the sector has seen Swedish buy-now-pay-later business Klarna file pre-IPO documents in the US this month. While the UK-registered company has picked New York over London as a listing venue, Chrysalis Investments (CHRY) could bring in £121mn in "liquidity" through the float, over a fifth of its current market capitalisation. Klarna will reportedly aim for a valuation of $15bn to $20bn (£12bn to £16bn), less than half of its 2021 valuation but up on two years ago, when it was also dragged down by the general retail malaise.
Its reception on the public markets will be determined by whether investors decide it is more of a Shopify or more like PayPal (US:PYPL), which has not seen the rebound post-Covid that Shopify has enjoyed.