Key Stats for Klarna Stock
- Price Change for Klarna stock: -9.3%
- $KLAR Share Price as of Nov. 18: $31.63
- 52-Week High: $57.20
- $KLAR Stock Price Target: $49
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What Happened?
Klarna (KLAR) stock dropped over 9% despite the buy-now-pay-later company beating revenue expectations in its first quarterly report as a public company.
The Swedish fintech posted Q3 revenue of $903 million, topping Wall Street’s $890 million estimate and marking 26% growth from $706 million a year earlier. It reported a net loss of $0.07 per share, narrower than the $0.26 per share estimate.
Gross merchandise volume climbed 25% to $32.7 billion, with strong performance in the U.S. market, where GMV jumped 43% year-over-year.
Klarna highlighted the impressive adoption of newer products.
- The Klarna Card, launched in July, has already reached over four million customers and accounted for 15% of transactions by October.
- Fair financing, which offers longer installment options for larger purchases, saw GMV more than triple from a year ago as the number of merchants offering the product doubled.
CEO Sebastian Siemiatkowski pointed out that fair financing still penetrates only about 20% of Klarna’s merchant base, creating “tons of opportunity” for expansion.
The company announced Elliott Investment Management agreed to purchase $6.5 billion of its fair financing loans, allowing Klarna to focus capital on U.S. growth.
The merchant count grew 38% to 850,000 from 616,000 last year, driven by partnerships with major payment processors like Stripe, Apple Pay, and Clover.
Klarna is pushing to become a default payment option when merchants sign up with these platforms, similar to how Visa and Mastercard work.
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What the Market Is Telling Us About Klarna Stock
The decline in Klarna stock appears tied to concerns about profitability rather than growth. Transaction margin dollars, a key profitability metric for the core business, totaled $281 million in Q3.
The company also guided Q4 transaction margin dollars between $390 million and $400 million, roughly in line with Street expectations.
Bank of America noted in a client note that “investors remain cautious on credit-driven growth.” The accounting treatment for fair financing creates a temporary profitability lag, as Klarna provisions for potential credit losses upfront while earning revenue over time as customers repay loans. This dynamic pressured Q3 margins despite strong top-line growth.
The broader market environment isn’t helping Klarna stock either. Shares have shed more than one-third of their value from recent highs as concerns mount over an AI bubble, stretched valuations, and a potential slowdown in consumer spending.
Klarna went public on the NYSE in September, after delaying its IPO earlier this year amid tariff uncertainty that rattled markets.
Despite the stock drop, some analysts found positives in the results. JPMorgan called the Q4 guidance for sequential improvement in transaction margin “encouraging.”
The company projects Q4 GMV of $38 billion and revenue of $1.065-$1.08 billion, both above consensus estimates.
Siemiatkowski emphasized Klarna’s focus on becoming more than just a buy-now-pay-later provider. The company is positioning itself as a full neobank offering savings products, debit card functionality, and cashback rewards.
Average revenue per customer jumps to $130 for Klarna Card users compared to $28 for typical active users, showing the monetization potential of deeper engagement.
The CEO also addressed AI’s impact on the business, noting that Klarna has reduced its workforce by 40% through natural attrition and AI adoption, with the technology helping cut average customer service resolution time to under two minutes.
However, Siemiatkowski cautioned that companies relying solely on AI for customer service are making a “big mistake” because human connection remains valuable.
On credit quality, Klarna reported issuing over $500 billion since its inception with less than 70 basis points in credit losses.
The short duration of its credit products allows the company to adjust underwriting models quickly when economic conditions change, giving it agility that traditional credit card issuers can’t match.
For now, Klarna stock appears caught between impressive growth metrics and investor concerns about profitability, timing, and credit-driven expansion.
The company’s Q4 guidance suggests transaction margins will improve as fair financing revenue compounds, but whether that’s enough to win over cautious investors remains to be seen.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
