Klarna Files for a US IPO 

If looser regulations are what led Swedish buy-now-pay-later firm Klarna to choose the US over the UK to host its IPO, its decision is looking even smarter today. 

Klarna, like the rest of the BNPL industry, has been bedeviled by regulators on both sides of the Atlantic. But on Wednesday, the day the BNPL giant filed paperwork with the US Securities and Exchange Commission to go public, news broke that incoming President Donald Trump has wrangled Elon Musk and Vivek Ramaswamy to set up a new “Department of Government Efficiency,” which Musk has promised would feature a “bonfire of nonsense regulations.”  

Buy Now, Regulate Later

Klarna is slightly late to the party in the USA, where rivals like Affirm and Sezzle are already publicly traded companies. Both companies’ share prices have been beneficiaries of the Trump trade, buoyed by promises of relaxed regulatory scrutiny. Questions have been mounting about whether BNPL companies in both the US and the UK should be bound by the same laws that restrict how banks and other financial services companies loan money to consumers. In the UK, the government is planning to place BNPL companies under its financial services regulator.

In the US, the go-to BNPL hawk has been Rohit Chopra, head of the Consumer Financial Protection Bureau, but Chopra’s future, and that of the agency he runs, is now looking extremely fragile:

• A 2020 Supreme Court ruling means that the president can remove the head of the CFPB at will. Trump is widely expected to fire Chopra as soon as he can, Bloomberg reported, unless Chopra steps down first.
• In Trump’s first term, he installed an interim CFPB director, Mick Mulvaney, who openly despised the agency and cut back both its budget and enforcement. 

In other words: It’s a fairly good bet that the CFPB’s in the gutting line.

To the Moon: Musk and Ramaswamy’s department has been meme-ifically named the DOGE, a nod to a cryptocurrency called dogecoin for which Musk is prone to public displays of affection. But the whole “Elon Goes to Washington” thing is starting to make Wall Street sweat just a bit. Bloomberg reported that even Tesla bulls are finding it hard to believe the scale of Tesla’s stock rally post-election. “There has been a renewed memefication of Tesla stock playing into the political momentum, and it makes no sense,” David Wagner, portfolio manager at Aptus Capital Advisors, told Bloomberg.