Klarna's revenue topped $1 billion for the first time in a quarter. Why did the stock plummet 25%?

Swedish digital payment service Klarna, which operates on the model "buy now, pay later", reported record revenue for the fourth quarter of 2025, but its forecast for 2026 was weaker than the market had hoped, writes Barron's. Against this background, the company lost more than a quarter of its value in one trading session. At the time of publication of this text, its shares were trading at just over $14 and may show the worst day for the entire time of circulation on the stock exchange, the publication points out.

JPMorgan analysts said the full-year outlook "fell short of Wall Street expectations on virtually all key metrics." The company continues to grow rapidly, but the shift from scaling to deepening customer engagement and building out its loan portfolio is putting pressure on its performance, Barron's paraphrased the bank's note.

The company's revenue for the reporting period grew by 38% year-on-year and for the first time, according to Klarna's calculations, exceeded $1 billion. In addition, this result exceeded the average estimate of analysts surveyed by Bloomberg: $1.08 billion against $1.07 billion. Gross sales also turned out to be better than expected, Barron's points out.

Revenue growth was supported by an increase in interest income and growth in the number of connections to the company's debit card. There were 4.2 million active card users in the fourth quarter.

Overall, 26 million more customers used Klarna products in the reporting period than in the same quarter of 2024. The average revenue per active customer remained unchanged at $30.

The company recorded a pretax loss of $16 million amid an increase in provisions for potentially troubled loans, Bloomberg notes. This is the second quarterly loss since the IPO. Charges to provisions for credit losses amounted to $250 million - 59% more than a year earlier. Analysts surveyed by Bloomberg had forecast $252 million.

For the current quarter, Klarna expects revenue between $900 million and $980 million, with Wall Street estimates above the midpoint of that range. year-to-date, the company expects revenue to grow more than 24%, while JP Morgan and the broader market have been pricing in growth of 31% and 29%, respectively, Barron's reports.

The company predicts gross sales for the year at more than $155 billion, consensus suggests $159 billion.

Klarna went public in September 2025, listing its shares on the New York Stock Exchange. On the first day of trading, the securities rose by 15% against the IPO price of $40, but the momentum quickly faded. Quotes were pressured by competition from other fintech startups and uncertainty about the future trajectory of interest rates. Since the beginning of this year, the company has already lost half of its market value.

Despite the collapse of quotations, Wall Street generally maintains an optimistic view of Klarna's prospects. 14 out of 19 analysts tracking its shares recommend them to buy, while the remaining analysts took a neutral stance. The average target price implies a potential upside of about 119% to the last close on Feb. 18.

This article was AI-translated and verified by a human editor