KLAR Stock Forecast & Price Target

Klarna has experienced significant growth, with the number of merchants increasing by over 201,000, representing a 34% year-over-year rise in the second quarter, indicating strong interest in its payment solutions. The improvement in net charge-offs since 2022 reflects the enhanced maturity of Klarna's underwriting models, which has been bolstered by the scaling of operations in key markets such as the US and UK. Furthermore, with the US Buy Now, Pay Later (BNPL) payment value expected to reach $116.7 billion this year and projected to grow at a 12% compound annual growth rate to $163.8 billion by 2028, Klarna is well-positioned to capitalize on this expanding market.

Klarna has reported realized losses of 0.45% as a percentage of Gross Merchandise Volume (GMV) in the second quarter of 2025, reflecting a slight drop of 3 basis points year-over-year, which raises concerns about credit risk management. Additionally, there is a noticeable decline in GMV per merchant over recent quarters, attributed to an influx of smaller retailers into the network due to new partnerships with Payment Service Providers, indicating potential challenges in maintaining revenue from larger brands. Furthermore, projections from Worldpay suggest a significant reduction in cash usage, which, while beneficial for credit card and digital payment growth, may not offset the existing pressures Klarna faces in the competitive lending space.