Klarna Stock (KLAR) Plunges 10% Following Debut Public Earnings Report

Klarna's first earnings call as a public company sends shareholders scrambling as shares tumble double-digits.

The Reality Check

KLAR got absolutely hammered—down 10% in a single session after revealing its financial performance to public markets for the first time. The buy-now-pay-later darling discovered that public investors aren't nearly as forgiving as private market cheerleaders.

Public Market Initiation

Welcome to quarterly earnings season, where growth stories meet cold, hard numbers. Klarna learned the hard way that going public means your financials get dissected by analysts who actually care about profitability—not just user growth metrics and buzzworthy partnerships.

Another fintech discovering that public markets prefer profits over promises—who could have predicted?

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Klarna, which held its initial public offering (IPO) in September of this year, reported third-quarter earnings per share (EPS) of $0.25, which just missed the consensus expectation of $0.26 on Wall Street. The company, which specializes in buy-now, pay-later loans, posted $903 million in Q3 revenue, which topped the $885.5 million that had been forecast among analysts.

Gross merchandise volume was strong in the quarter, rising 43% to $32.7 billion. On a global basis, that metric ROSE 23%. Klarna’s management team defines global merchandise volume as the total monetary value of all completed purchases over its network.

The ‘Klarna Card’

Importantly, adoption of the company’s “Klarna Card” increased in Q3. Since its launch in July, over four million consumers have signed up for the card, according to the company. The Klarna Card is both a debit card for instant payments and a credit card to split purchases into installment payments.

The main reason that the stock is falling after earnings are growing concerns about rising borrowing costs and competition from other fintech companies such as Affirm (AFRM). Klarna also faces increased scrutiny over its customer loan defaults. Prior to its IPO, Klarna disclosed a first-quarter net loss of $99 million, due largely to rising customer credit losses.

KLR stock has fallen 18% since its IPO

Is KLAR Stock a Buy?

Klarna’s stock has a consensus Strong Buy rating among 15 Wall Street analysts. That rating is based on 12 Buy and three Hold ratings issued in the last three months. The average KLAR price target of $50.07 implies 56.08% upside from current levels.