Key Highlights
- Shares of Klarna climbed 9% Tuesday following reports that Apple selected the fintech company to provide financial backing for Apple Upgrade, a new device leasing initiative.
- Set to debut July 28, the program will encompass most iPhone, Mac, iPad, and Apple Watch products, offering 24 or 36-month lease agreements.
- The subscription-style Apple Upgrade service allows customers to pay off devices ahead of schedule, upgrade to newer models, or retain their hardware when the lease concludes.
- Apple plans to discontinue new sign-ups for its current iPhone Upgrade Program and conventional financing alternatives to prioritize the new offering.
- This collaboration comes after Apple abandoned its proprietary hardware subscription initiative in 2024.
A strategic alliance between Apple and Klarna for a device leasing initiative dubbed Apple Upgrade propelled Klarna (KLAR) stock upward by 9% Tuesday. Apple (AAPL) shares also experienced gains, rising approximately 0.82% on the announcement.
The initiative rolls out July 28 throughout the United States, accessible both at Apple’s physical retail locations and through its digital storefront.
Klarna will serve as the financing partner behind the program. Prospective participants must successfully complete a soft credit inquiry for approval.
The Apple Upgrade program encompasses most iPhone, Mac, iPad, and Apple Watch devices. Lease durations for iPhone and Apple Watch products span 24 months, whereas Mac and iPad agreements extend to 36 months.
Participants receive three choices when their lease term concludes: settle the remaining balance ahead of schedule, transition to a newer device model, or retain ownership of their current hardware.
Existing Programs Face Phase-Out
To facilitate the rollout of Apple Upgrade, the tech giant intends to halt new registrations for its existing iPhone Upgrade Program and traditional financing arrangements.
Apple will market the new initiative as providing reduced monthly costs compared to current offerings ā although it’s important to recognize that AppleCare protection isn’t bundled in, contrasting with the existing iPhone Upgrade Program.
Certain devices won’t be eligible. The Apple Watch SE, base-tier iPad, iPhone 16, and MacBook Neo fall outside the program’s scope. Corporate and educational acquisitions are similarly excluded.
The Rationale Behind Klarna
Apple had previously attempted to develop a proprietary hardware subscription platform but discontinued those efforts in 2024. Collaborating with Klarna enables Apple to deliver the leasing offering while avoiding the financial exposure on its corporate balance sheet.
For Klarna, securing Apple as a strategic partner represents a significant achievement. The Stockholm-based fintech has been broadening its scope considerably beyond its original buy-now-pay-later foundation.
Apple maintains a market capitalization of approximately $4.80 trillion. Its price-to-earnings ratio currently stands at 39.53, approaching its decade-high watermark of 42.04.
Regarding insider activity, Apple leadership offloaded $87.6 million in shares over the previous three months, with zero insider purchases documented throughout that timeframe.
Klarna’s shares concluded Tuesday’s session with a 9% gain following the Bloomberg disclosure, while AAPL advanced roughly 0.82% during the trading day.
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