UBS downgraded Klarna from Buy to Neutral on Sunday, citing weaker growth prospects and executive departures, reducing its price target to $16 from $23.
The Swiss bank’s move follows Klarna’s second-quarter earnings report, which showed a 31% weekly stock decline to $14.33 and a 50% year-to-date drop, leaving shares just above their 52-week low of $12.06.
BMO Capital, Morgan Stanley and TD Cowen also lowered their price targets for the buy-now-pay-later firm, with BMO reducing its target to $15 from $19, Morgan Stanley to $17 from $21, and TD Cowen to $18 from $19. TD Cowen maintained a Hold rating, while Needham reiterated its Hold recommendation.
Klarna’s guidance revision cut its second-half 2026 gross merchandise volume (GMV) outlook by roughly $3.4 billion at the upper end, excluding currency effects, with an estimated annualized impact of about $6 billion. The company also lowered its full-year GMV forecast to $150 billion from over $155 billion.
Second-quarter earnings showed a profit of $0.01 per share, beating TD Cowen’s estimate of a $0.03 loss and the consensus forecast of a $0.05 loss.
Executive departures added to concerns, with Klarna’s CFO and CMO set to leave in the coming quarters. The company highlighted weaker international growth, particularly in Germany, though it pointed to new distribution partnerships with Apple, expanding card programs and an early-stage U.S. fair financing business as potential positives.
Separately, BTIG Research noted that Affirm Holdings’ asset-backed securities delinquencies for its 2025-X2 cohort have reached record highs at nine months, exceeding prior cohorts at the same stage.
