Klarna is getting punished by Wall Street today after the payments company reported Q4 earnings that missed profitability expectations but nailed revenue.
KLAR is down 26.5% at the time of writing, trading at lows of $13.9 after highs of $58.
The brutal drop comes after their first $1 billion-dollar revenue quarter, coming in at $1.082 billion, up 38% year-over-year (58% in the U.S.). Gross merchandise volume (GMV) also did well, rising 32% to $38.7 billion.
What scared investors, though, was their soft 2026 guidance: The company GMV projected over $155 billion, below analyst consensus of $159 billion — a clear sign of deceleration that Wall Street did not let them off the hook for.
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Buy-now, pay-later services like Klarna live and breathe on metrics like GMV. With persistent inflation, cooling consumer spending, along with U.S. retail sales growth slowing down to 2-3% late last year, merchant volumes and average order values are taking a direct hit.
Klarna’s drop wasn’t just sentiment-driven. The company posted a $0.12 per-share loss, badly missing consensus, as costs from its pivot into longer-term installment loans, called “Fair Financing” and typically spanning 6 to 24 months, and banking services weighed on results. Investors are increasingly cautious about Klarna’s digital bank transition, similar to moves by Robinhood, as higher interest expenses and $250 million in credit losses, up 59% year-over-year and about 0.65 percent of GMV, pressured margins. Overall profit came in at $47 million versus $65 million expected, largely due to rapid growth in its new banking loan products.
Looking ahead, CEO Sebastian Siemiatkowski is being as transparent as others in his sector about the grim reaper of AI coming for white-collar jobs, believing that headcount will shrink by roughly a third by 2030. They plan to launch their “digital financial assistant” and continue to lean on AI as a means of commerce infrastructure, putting themselves on the ground floor of payments.
With those frosty macro conditions — and the stock over 75% below its September IPO price — those who bought at the top are left holding the bag. Klarna is having one of its worst days in the company’s history, but if they’re able to shake off their IPO woes and get through this rough patch, things could turn around.
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