KLAR Stock Forecast & Price Target

Klarna Group PLC has demonstrated a positive trajectory with a significant reduction in net charge-offs, attributed to the maturation of its underwriting models, particularly as it expands operations in lucrative markets like the US and UK. The company has also experienced robust growth in its merchant base, increasing by over 201,000, or 34% year-over-year in Q2, indicating strong demand for its buy now, pay later solutions among retailers. Furthermore, the BNPL payment market in the United States is projected to reach $116.7 billion in 2023, reflecting a year-over-year growth of 19.2% and a forecasted CAGR of 12% to $163.8 billion by 2028, positioning Klarna favorably within this expanding sector.

Klarna Group PLC has reported a realized loss of 0.45% as a percentage of Gross Merchandise Volume (GMV) in 2Q25, showcasing a marginal year-over-year decrease of 3 basis points, indicating persistent challenges in maintaining profitability. Additionally, there is a noted decline in GMV per merchant over recent quarters, attributed to partnerships with Payment Service Providers (PSPs) that have brought smaller retailers into the network, potentially straining revenue per transaction. Lastly, the anticipated increase in credit card and digital payment growth across less developed countries may further intensify competition, raising concerns about Klarna's market position in an evolving financial landscape.