Key Highlights
- Shares of Klarna declined 6.1% Monday to close at $19.53, accompanied by unusually light trading volume 84% below normal levels.
- The buy-now-pay-later company reports Q2 results Tuesday morning; consensus calls for a $0.05 per share loss and $992.8 million in revenue.
- Wall Street maintains a “Moderate Buy” rating with an average price target of $24.55, suggesting potential upside near 18%.
- The company submitted paperwork for a U.S. banking charter in early July, but some analysts question the potential earnings impact given its existing European license.
- First quarter results exceeded expectations with a $0.01 per share loss compared to the anticipated $0.20 loss, alongside $1 billion in revenue.
Shares of Klarna (KLAR) retreated 6.1% Monday, settling at $19.53 just hours before the company unveils second-quarter financial results. The session started with shares at $20.79. Volume registered approximately 887,765 shares, representing an 84% decline from the typical daily average of 5.3 million.
The decline occurred as market participants positioned themselves ahead of Tuesday’s before-the-bell earnings announcement, with attention focused on whether the fintech company can continue improving its bottom line.
Consensus forecasts point to an adjusted loss of $0.05 per share alongside revenue reaching $992.8 million for the three months ended June. This represents a 61.5% year-over-year reduction in losses and revenue expansion of 20.6%. However, these figures would represent a sequential decline from the first quarter, when the company delivered $1 billion in revenue and narrowed its loss to merely $0.01 per share.
Earnings per share projections have climbed 11.29% during the past two months, indicating growing analyst confidence in Klarna’s trajectory toward breaking even.
U.S. Banking Charter Application Under Scrutiny
Among the key narratives surrounding this earnings report is Klarna’s pursuit of a United States banking license. The firm submitted regulatory filings with Utah’s Department of Financial Institutions and the Federal Deposit Insurance Corporation in early July to create Klarna Bank USA.
This initiative aligns with a broader industry trend of BNPL providers and digital lenders pursuing banking charters throughout 2026. Yet some market observers remain skeptical about the strategic value for Klarna specifically.
Kyle Peterson from Needham, maintaining a neutral stance on the shares, highlighted that Klarna has operated under a banking license in Europe since 2017. This existing framework diminishes the competitive funding advantages the company might otherwise capture. Peterson indicated that Klarna stands to gain “ultimately receive less EPS accretion relative to peers that do not currently have access to deposit funding for loans.”
Wall Street Sentiment and Target Projections
The analyst community leans favorable on Klarna’s prospects. Overall sentiment registers as “Moderate Buy” with a consensus price objective of $24.55, representing approximately 18% potential appreciation from Monday’s closing price. Alternative data sources place the average target at $32.28.
Recent analyst movements include JPMorgan increasing its price objective from $20 to $22 while maintaining an overweight recommendation. TD Cowen adjusted its target upward from $17 to $19 with a hold rating. Barclays launched coverage with an equal weight stance and $20 price target. Zacks reduced its recommendation from strong buy to hold on August 5.
The breakdown shows one strong buy rating, eleven buy recommendations, ten hold positions, and a single sell rating.
Institutional activity has shown notable movement. Commonwealth Bank of Australia established a fresh position valued at approximately $503 million. Wellington Management initiated a stake worth roughly $349 million. BlackRock expanded its position by 89.6% throughout the second quarter.
Over the trailing twelve months, Klarna’s shares have fluctuated between $12.06 and $57.20. Current pricing places the stock toward the lower portion of this band, with market capitalization hovering around $7.29 billion and a price-to-earnings multiple of -37.26.
The stock’s 50-day moving average stands at $18.90, while the 200-day moving average registers at $16.85.
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