Klarna: A Curious Case in Buy Now

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Klarna, the Swedish fintech that recently graced the stock market (September 2025, if you’re keeping track – and honestly, who isn’t?), is proving to be…well, let’s just say it’s not exactly setting the world alight. Since its initial public offering, the shares have rather stubbornly declined, shedding about 24% of their value. Meanwhile, the S&P 500, that relentlessly upward-trending benchmark of American capitalism, has been merrily skipping along, gaining 7%. It poses a question, doesn’t it? Is Klarna a bargain basement find, or a value trap disguised as a convenient payment option?

Paying it Forward (or Just Splitting the Bill)

The core of Klarna’s business, as anyone who’s impulsively purchased a slightly-too-expensive pair of shoes can attest, is “Buy Now, Pay Later” – BNPL, as the cool kids call it. Their signature offering, “Pay in 4,” is elegantly simple: you get your thing now, and then spread the cost over four interest-free payments. Provided, of course, you don’t forget and end up owing money. Which, let’s be honest, happens more often than we’d like to admit. For longer-term purchases – sofas, televisions, that slightly-too-expensive espresso machine – they offer “Fair Financing,” which, naturally, involves interest. It’s a subtle distinction, really, between ‘fair’ and ‘not quite free’.

You’d be surprised where you encounter Klarna these days. Airbnb, for example, now lets you “Pay in 4” for your next weekend getaway. DoorDash, too, if you’re feeling particularly peckish and averse to immediate financial responsibility. It’s become rather pervasive, hasn’t it? Like those little plastic sporks you get with airline meals – seemingly everywhere, and rarely quite adequate.

Despite the general market glumness, Klarna managed to hit a new quarterly revenue high in Q3 2025 – $903 million, a robust 28% year-over-year increase. It’s a substantial sum, roughly equivalent to the annual GDP of a small island nation, or a surprisingly large number of Swedish meatballs. They’re particularly focused on the U.S. market, which, unsurprisingly, is where most of the spending happens. Gross Merchandise Value in the U.S. zoomed up 43%, contributing generously to an overall GMV tally of $32.7 billion. The numbers are impressive, even if you’ve temporarily forgotten what a billion is.

They’ve also seen a healthy increase in merchants (up 38% to around 850,000) and active customers (up 32%). Which is good. More customers and merchants generally indicate a functioning business. It’s a bit like a successful bakery – lots of people buying bread, and lots of bakers baking it.

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Banking on Ambition (and Stablecoins)

Klarna rather boldly describes itself as a “digital bank.” It’s a bit like your local hardware store suddenly declaring itself a spaceship manufacturer. Ambitious, certainly. They’re not content with simply facilitating payments; they want to be the bank. And, rather unexpectedly, they’ve decided to jump on the cryptocurrency bandwagon with their own stablecoin, KlarnaUSD. The stated goal is cost savings, but it feels a bit like adding a hot air balloon to the aforementioned spaceship. Intriguing, certainly, but potentially…complicated.

Is all this enough to make Klarna a compelling stock? BNPL is undoubtedly one of the hottest consumer fintech innovations of recent times. According to Adobe Analytics, BNPL purchases totaled $20 billion during the November-December holiday season, representing a nearly 10% gain. It’s a significant chunk of the $258 billion total retail spend, even if that overall figure only increased by a modest 7%.

Researchers predict robust growth for BNPL in the years to come. ResearchAndMarkets.com estimates a compound annual growth rate of 8.5% from 2025 to 2030 in the U.S., rising from $109 billion to over $184 billion. That’s a lot of delayed gratification. However, the sector is fiercely competitive, with Affirm and Block’s Afterpay vying for market share. It’s a bit like a crowded marketplace, with everyone shouting about the best payment options.

Consumer finance is, naturally, fraught with risk. Klarna’s provisioning for credit losses more than doubled in Q3 to $235 million. Sales and marketing costs also increased considerably, as did technology and product development. All this contributed to a net loss of $95 million for the period. It’s a reminder that even the most innovative businesses aren’t immune to the realities of financial life.

However, Klarna has scored a significant win by replacing Affirm as the sole provider for Walmart’s OnePay BNPL service. That’s a bit like winning the lottery, or at least getting a really good parking space. It suggests that Klarna is doing something right, or at least something that Walmart approves of.

A Bargain, Perhaps? (Or Just a Clever Illusion)

As you might expect from an ambitious company in a rapidly evolving industry, Klarna’s stock isn’t cheap. Its forward P/E ratio is a robust 59, and its P/S ratio is just shy of 4. But some analysts are expecting not only profitability in the near future but growth robust enough for a five-year PEG ratio of just 0.25. (Generally, a PEG ratio under 1 suggests undervaluation.)

I believe Klarna stock is a bargain. BNPL appeals to consumers of all stripes, especially those on a budget. It’s a model that should work in both good times and bad. The BNPL sector is sure to expand, and with a management team that keeps the company competitive and likes to innovate, Klarna is a fine play on that expansion. It’s not a guaranteed success, of course. But then, very little in life is. It’s a curious case, this Klarna. And sometimes, the most interesting investments are the ones that make you scratch your head and say, “Well, isn’t that peculiar?”

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2026-01-15 15:02