Wolfe Research downgraded Klarna from Outperform to Peer Perform on Monday, citing short-term investor caution and concerns over visibility despite the company’s solid second-quarter results.
The downgrade follows a reduction in Klarna’s full-year gross merchandise volume (GMV) outlook to $150 billion from over $155 billion, alongside the announcement of a transition for its Chief Financial Officer and a fair-value accounting change that introduces additional variables. Klarna’s stock, listed under the ticker KLAR, was trading at $14.11, near its 52-week low of $12.06, and has fallen 6.3% over the past week and 51% year-to-date.
Klarna reported second-quarter earnings per share of $0.01, beating both TD Cowen’s estimate of negative $0.03 and the consensus estimate of negative $0.05. The company’s Q2 performance provided a rare positive outlier in a challenging operating environment.
Several other financial institutions adjusted their assessments of Klarna following the results. BMO Capital reduced its price target to $15 while maintaining a Market Perform rating. UBS downgraded Klarna from Buy to Neutral and lowered its target to $16. TD Cowen trimmed its target from $19 to $18, citing weakness in Germany, and kept its Hold rating. Needham, however, reiterated a Hold rating after Klarna beat revenue and earnings consensus.
The broader context includes rising early-stage delinquencies in Affirm Holdings’ asset-backed securities, with BTIG Research noting that 30-to-59-day delinquencies are at all-time highs for the most recent vintages. The developments underscore ongoing stress in the buy-now-pay-later sector amid shifting consumer credit conditions.
