The third quarter of 2025 marked a significant resurgence in initial public offerings (IPOs), with 60 companies raising a combined $14.6 billion. This level of activity, the highest since 2021, has drawn the attention of major financial institutions. Analysts at Goldman Sachs have closely examined two recent high-profile market debuts: fintech firm Klarna Group (KLAR) and cryptocurrency exchange Gemini Space Station (GEMI), offering distinct outlooks on their investment potential.
Key Takeaways
- Goldman Sachs issued a "Buy" rating for Klarna (KLAR), citing its market leadership in the Buy-Now-Pay-Later sector and strong European presence.
- The firm assigned a "Neutral" rating to Gemini (GEMI), expressing caution due to its lack of profitability and exposure to the cyclical crypto market.
- IPO activity surged in Q3 2025, raising $14.6 billion, a substantial increase from the $2.4 billion raised in the same quarter of the previous year.
- Klarna's IPO raised $1.37 billion, while Gemini's offering raised over $446 million.
IPO Market Shows Renewed Vigor in Third Quarter
Initial public offerings are a vital component of the financial markets, introducing new companies and investment opportunities. They provide capital for growing businesses and allow the public to invest in their future.
The third quarter of 2025 demonstrated a notable increase in this activity. The market saw the largest number of IPOs since 2021, with 23 deals exceeding the $100 million mark, another multi-year high. In total, 60 companies went public during the quarter.
Q3 2025 IPO Statistics
- Total IPOs: 60
- Total Capital Raised: $14.6 billion
- Change from Q3 2024: Up from $2.4 billion
- $100M+ Deals: 23, the most since 2021
This rebound in IPOs has prompted analysts to evaluate the new entrants. Goldman Sachs has been particularly active in assessing these companies as they begin their journey as publicly traded entities. Their analysis of Klarna and Gemini provides insight into how Wall Street views these two distinct technology firms.
Klarna's Strong Market Debut and Positive Outlook
Klarna Group (KLAR), a Swedish financial technology company, is a global leader in online payment solutions for e-commerce. The company is best known for its "Buy Now, Pay Later" (BNPL) services, which allow consumers to make purchases and pay for them in installments.
Klarna's Business at a Glance
Klarna's platform serves a vast network of users and merchants. It currently has 111 million customers and is used by 790,000 businesses across 26 countries. The company processes an impressive $112 billion in gross merchandise volume. Major global brands like Spotify, Samsung, and Ikea are among its partners.
The company made its public debut on the New York Stock Exchange on September 10. The offering was priced at $40 per share, which was above the initially projected range, signaling strong investor demand. The IPO consisted of 34.3 million shares, raising a total of $1.37 billion. Klarna itself received $222 million from the sale of 5 million new shares.
Understanding Buy Now, Pay Later (BNPL)
BNPL is a type of short-term financing that has gained popularity in online retail. It allows consumers to split the cost of a purchase into several equal payments, often without interest. This model appeals to younger consumers and those who prefer not to use traditional credit cards.
Goldman Sachs Analyst Endorses Klarna
Goldman Sachs analyst Will Nance views Klarna as a compelling investment. He assigned a Buy rating to KLAR with a price target of $55, suggesting a significant potential upside from its recent trading price.
"We view Klarna as the market leader in Buy-Now-Pay-Later (BNPL) solutions, with a particularly strong franchise in Europe, where we believe Klarna is a new, emerging closed loop payment scheme, similar to American Express in the United States," Nance stated.
The analyst believes Klarna is well-positioned to gain market share over time. This growth is expected to be driven by the broader shift toward BNPL services, the company's powerful network effects, and its ongoing international expansion. While acknowledging the risks associated with consumer finance cycles, Nance's overall outlook is positive.
The broader analyst community shares this sentiment. Klarna holds a "Strong Buy" consensus rating, based on 11 buy ratings and 3 hold ratings. The average price target of $50.46 suggests a potential 30% increase over the next year.
Gemini Faces Cautious Reception After IPO
The second company under Goldman's microscope is Gemini Space Station (GEMI), a technology firm focused on the cryptocurrency sector. Founded in 2014, Gemini operates a registered crypto exchange and custodial service, aiming to connect the traditional financial system with the digital asset economy.
Gemini's Crypto-Centric Offerings
Gemini provides a mobile app for trading cryptocurrencies and a web-based wallet for both individual and institutional clients. A key feature of its consumer strategy is the Gemini Credit Card, which offers rewards in the form of cryptocurrency, such as Bitcoin, instead of traditional points or cash back.
The company promotes this with claims of significant appreciation for rewards held over time. The card has no annual fee and offers up to 4% back on purchases. Gemini emphasizes its regulatory compliance, holding certifications like ISO 27001 for information security.
Gemini's IPO took place on September 12, with shares priced at $28. The offering raised over $446 million in gross proceeds. However, since its debut, the stock has experienced a significant downturn, declining by approximately 30% and bringing its market capitalization to just over $3 billion.
Goldman Sachs Analyst Advises Caution
In contrast to the optimism for Klarna, Goldman Sachs analyst James Yaro takes a more reserved stance on Gemini. He has issued a Neutral (Hold) rating for GEMI, with a price target of $25.
Yaro's concerns center on the company's financial performance and market risks. He highlighted several key issues for investors to consider.
"Despite the constructive growth outlook, lack of profitability, and cyclical and competitive questions keep us on the sidelines. GEMI faces cyclical risk, in terms of: 1) an uncertain path to profitability, as we forecast positive adjusted EBITDA only in 2028E," Yaro explained in his report.
The analyst also pointed to the credit and interest rate risks associated with the rapid growth of Gemini's credit card business, especially in the event of an economic downturn. Furthermore, potential regulatory changes in the crypto space could increase competition from established financial institutions, potentially pressuring Gemini's market share and pricing.
Wall Street is divided on Gemini's prospects. The stock has a "Moderate Buy" consensus rating, derived from 6 buy ratings and 5 hold ratings. The average price target of $31.64 suggests a potential 36% upside, but the wide range of opinions reflects the uncertainty surrounding the company.
Conclusion: Goldman's Clear Preference
Based on the initial analyses from Goldman Sachs, Klarna emerges as the preferred investment between the two recent IPOs. The firm's established market position, strong growth drivers, and clearer path to profitability give it an edge over Gemini, which operates in the more volatile and less certain cryptocurrency market.
While Klarna must navigate the cycles of consumer finance, its foundational business model appears more robust in the current environment. Gemini's future, though potentially promising, is tied to the unpredictable crypto market and a longer road to achieving profitability, leading Goldman Sachs to recommend a more cautious approach for investors.
