J.P. Morgan downgraded Klarna to Neutral from Overweight on Tuesday, citing a weaker growth outlook and reducing its price target to $18 from $22.
The bank trimmed its near-term forecasts for the Swedish buy-now-pay-later firm, projecting third-quarter gross merchandise volume (GMV) growth of 7% to 10%, down from its prior 20% estimate. Revenue is expected to reach $940 million to $980 million, while adjusted operating profit is forecast at $5 million to $15 million.
Klarna reported second-quarter GMV of $36.6 billion, up 18% year-over-year, and revenue of $1.04 billion, a 25% increase on a foreign-exchange-neutral basis. Adjusted operating profit came in at $91 million, exceeding J.P. Morgan’s $46 million estimate and Klarna’s guidance range of $30 million to $50 million.
For the full year, Klarna cut its GMV forecast to $149 billion–$151 billion, from above $155 billion previously, and lowered its adjusted operating profit guidance to $280 million–$300 million, from above $299 million.
J.P. Morgan also reduced its 2026 revenue estimate to $4.13 billion from $4.40 billion and cut its 2026 adjusted operating profit forecast to $283 million from $322 million. For 2027, it lowered its GMV growth estimate to 14% from 18% and slashed its adjusted operating profit projection to $402 million from $600 million.
The bank highlighted softer discretionary spending in Germany and broader Europe as a key drag on performance. Germany accounted for about one-third of Klarna’s GMV in 2025, with second-quarter revenue growth slowing to 16% from 22% in the first quarter. The outlook for the third quarter suggests further deterioration.
J.P. Morgan noted potential growth drivers, including Klarna’s U.S. expansion, longer-duration loans, and partnerships with Apple and Walmart. The bank also pointed to planned departures of Klarna’s chief financial officer and chief marketing officer, as well as a shift to fair-value accounting for certain loans, as factors influencing its revised estimates.
