UBS downgraded Klarna’s stock rating to Neutral from Buy and reduced its price target to $16 from $23, citing a guidance cut and the departure of key executives. The move follows a broader reassessment of growth prospects at the buy-now-pay-later firm.
The downgrade comes as Klarna’s shares trade at $14.33, just above the 52-week low of $12.06. The stock has fallen 31% over the past week and is down 50% year-to-date. UBS attributed the rating change to a cut in guidance that reduces expected gross merchandise volume (GMV) by approximately $3.4 billion at the high end, excluding foreign exchange effects. The annualized impact of the guidance reduction is estimated at around $6 billion, driven largely by weaker international growth, particularly in Germany.
Klarna also reported Q2 2026 earnings per share of $0.01, beating expectations for a loss of $0.03. However, full-year GMV guidance was lowered to $150 billion from over $155 billion. The company’s chief financial officer and chief marketing officer, both long-time executives, are set to depart over the coming quarters.
Despite the downgrade, UBS acknowledged Klarna’s progress in expanding its card programs and forming new distribution partnerships, including with Apple. The firm also highlighted the potential of its nascent U.S. Fair Financing business, which operates in a large and attractive market.
Other analysts have also adjusted their outlooks. BMO Capital reduced its price target to $15 from $19 while maintaining a Market Perform rating, while Morgan Stanley lowered its target to $17 from $21. TD Cowen revised its target to $18 from $19 but kept a Hold rating. Needham reiterated a Hold rating. Klarna’s stock performance has lagged amid broader market concerns about consumer credit trends, with BTIG Research noting elevated early-stage delinquencies in Affirm Holdings’ asset-backed securities as a contributing factor.
