KLAR Stock Forecast & Price Target

Klarna's stock outlook appears positive due to significant improvements in net charge-offs, which have been attributed to the enhanced maturity of its underwriting models and the scaling of its operations in key markets like the US and UK. The company has also experienced substantial growth in its merchant base, adding over 201,000 merchants (+34% year-over-year) in the second quarter, highlighting its effectiveness in attracting retailers to its payment solutions. Additionally, the rapidly expanding buy now, pay later market in the United States, projected to grow from $116.7 billion this year to $163.8 billion by 2028 at a 12% compound annual growth rate, further underscores the favorable environment for Klarna's business model.

Klarna has reported realized losses of 0.45% as a percentage of Gross Merchandise Value (GMV) in the second quarter of 2025, a figure that reflects a marginal decline of 3 basis points year-over-year, indicating potential concerns about credit performance. Additionally, the company's GMV per merchant has been experiencing a downward trend over recent quarters, primarily attributed to partnerships with Payment Service Providers (PSPs) that have resulted in smaller retailers joining the network, which may raise questions about overall revenue growth and the strength of Klarna's business model. These metrics, combined with the broader industry trend toward digital payment growth at the expense of cash transactions, suggest mounting challenges for Klarna's financial stability and competitive positioning in the buy now, pay later market.