In our note published 7 February 2024, we wrote “The managers envisage that Klarna could be worth $18bn based on Klarna trading on the same gross profit multiple as closest-listed peer, Affirm. CHRY has a 1% stake. On those figures, a Klarna sale could add about 30p to the NAV.”
Unfortunately, there was a drafting error in the note that was not picked up when the note was edited, for which we apologise. On an $18bn valuation, the value of the stake in Klarna would be about 24.7p and the uplift would be closer to 8p. The note has been corrected to reflect that.
At the end of December 2023, CHRY’s stake in Klarna was valued at £93.2m or 16.3p per share.
If you apply Klarna’s historic earnings and apply Affirm’s multiple you get a valuation of about $18bn. However, an earlier draft was looking at applying Affirm’s multiple to Klarna’s forecast earnings – that would give a figure closer to $21bn or about 29p per share. Nevertheless, this would be the value of the stake and not the uplift.
Recent press speculation has talked about an IPO valuation of $20bn, which would imply a valuation of CHRY’s stake at about 27.6p per share.
Similarly, the wording on our Starling comment implied that a £3bn valuation for Starling would add about 48p to the NAV rather than – as it should have said – a £3bn valuation making the value of CHRY’s stake about 48p per share.