Klarna Stock Price Forecast $38–$55 - KLAR at $41 After IPO Surge

Klarna (NYSE:KLAR) Stock Analysis – September 2025

IPO Debut and Market Performance of NYSE:KLAR

Klarna (NYSE:KLAR) made its long-anticipated debut at $40 per share, priced above the initial $35–$37 range due to oversubscription. The first session saw extreme volatility with the stock spiking above $50 before settling near $46. Today, KLAR trades at $41.12, pulling its valuation down to around $16.15 billion compared to the initial $15.1 billion IPO valuation. While the IPO raised $1.37 billion, only 5.5 million shares came directly from the company, with most proceeds going to early backers such as Sequoia Capital. Founder Sebastian Siemiatkowski retained his Class B super-voting stake, leaving new investors with limited governance control.

Revenue Growth, Margins, and Credit Losses

For fiscal 2024, Klarna delivered $2.81 billion in revenue, up 23% year-over-year, after a 20% increase to $2.28 billion in 2023. Operating losses narrowed significantly from $323 million in 2023 to $121 million in 2024, showing strong leverage. In the first half of 2025, however, growth slowed with Q1 revenue up just 9% to $701 million and losses deepening to $90 million due to surging credit provisions. By Q2, revenue improved to $823 million (+20% YoY), but operating losses reached $46 million as credit loss provisions jumped to $174 million. Annualized, Klarna generates roughly $3.01 billion in sales, but its net income remains negative at –$95.4 million with a margin of –3.17%.

Consumer Base, Merchant Network, and GMV Trends

Klarna has become one of the largest Buy Now Pay Later (BNPL) players globally, serving 111 million active users and nearly 800,000 merchants. GMV grew 21% year-over-year to $31.2 billion in Q2, with “Pay Later” transactions making up 80% of activity. The average transaction value in this category is just $88, but Klarna earns merchant fees near 2.7%, higher than its European average, thanks to the U.S. market where fees are richer but risks higher. European credit losses are as low as 0.2% of GMV, while U.S. charge-offs are much higher at 1.4% of GMV. This divergence highlights the tension between growth and risk in Klarna’s U.S. expansion.

Balance Sheet, Cash Flow, and Valuation Multiples

Klarna reported $6.74 billion in cash and $814 million in debt, with a healthy current ratio of 17.8x. However, levered free cash flow was negative at –$1.73 billion, reflecting rising costs of scaling BNPL lending. At $41.12 per share, Klarna trades at 5.62x sales and 30.8x EV/EBITDA, rich multiples considering its lack of profitability. Affirm (NASDAQ:AFRM), by comparison, trades at lower sales multiples despite faster growth at 40% YoY and nearly break-even margins. This raises questions about whether KLAR’s premium valuation is justified given its slower trajectory and heavier credit risk profile.

Competitive Pressures and Strategic Outlook for NYSE:KLAR

Competition remains intense. Affirm in the U.S., PayPal’s Pay Later, Apple Pay Later, and Revolut in Europe all threaten Klarna’s share. Credit card issuers are regaining momentum by pushing reward-based financing, while stablecoin-based payments and blockchain rails represent emerging long-term competition. Klarna’s advantage remains in its consumer-friendly brand and its massive merchant ecosystem, yet its need to attract deposits in Europe to fund loan growth exposes it to rising funding costs. With deposit costs at 2.54%, every rate hike in Europe could further compress margins unless offset by higher merchant fees.

Forecast, Price Targets, and Investment Verdict

Analyst coverage remains limited, but projections suggest revenue could reach $3.64 billion in 2025 and $4.61 billion in 2026, a growth rate near 26%. However, EPS visibility remains weak, with consensus expecting continued GAAP losses. With shares trading near $41, below the $47.22 peak, the IPO enthusiasm has cooled. Price targets range from $38 on the low end to $55 on the high end, reflecting skepticism about U.S. credit losses and the long runway needed to achieve profitability. Given the valuation multiples, cash burn, and competitive risks, the current stance for NYSE:KLAR is Hold, with upside dependent on Klarna proving it can stabilize credit losses while sustaining 20%+ revenue growth.

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