Klarna (KLAR) Stock Plunges 22% as JPMorgan Downgrades Following Revenue Forecast Cut

Key Takeaways

• Shares of Klarna plummeted more than 22% following reduced full-year revenue projections and the announcement that both CFO and CMO will exit the company.
• The company revised its annual revenue projection downward to $4.08B-$4.16B from previous guidance of $4.3B, missing analyst expectations of $4.4B.
• Second quarter revenue reached $1.04B, representing a 27% year-over-year increase and surpassing the $996.5M consensus estimate.
• JPMorgan revised its rating on KLAR from Overweight to Neutral while reducing the price target from $22 down to $18.
• Declining performance in Germany, the company’s biggest market, was identified as the primary factor behind the weakened projections.

Shares of Klarna (KLAR) experienced a steep decline of over 22% on Tuesday, closing at $15.44, following the fintech company’s decision to lower its annual revenue projections while simultaneously announcing the upcoming departure of two key C-suite executives.

Klarna Group plc, KLAR

Chief Financial Officer Niclas Neglén and Chief Marketing Officer David Sandström will both exit their positions in early 2027, concluding tenures of six and nine years with the organization, respectively. The company has yet to identify successors and stated it is actively recruiting for a New York-based finance chief.

Year-to-date, the stock has declined approximately 48%, while over a twelve-month period it has surrendered roughly 67% of its market value. Klarna went public in late 2025 with an initial offering price of $40 per share.

Despite the market reaction, second quarter performance exceeded Wall Street projections. Revenue climbed 27% year-over-year to reach $1.04 billion, surpassing analyst forecasts of $996.5 million. The company posted net income of $9 million, contrasting favorably with expectations for an $18 million loss. This marked the second consecutive quarter of earnings beats for the payments firm.

The concern centered on future projections. For the third quarter, Klarna now anticipates revenue between $940 million and $980 million, significantly beneath the $1.11 billion consensus estimate. Annual guidance was similarly reduced to a range of $4.08B-$4.16B, down from the previous $4.3B target and missing the $4.4B analyst consensus.

German Market Weakness Drives Guidance Reduction

The revised outlook stems primarily from deteriorating consumer spending patterns in Germany, which represents Klarna’s largest market by transaction volume. CFO Neglén indicated that discretionary spending began weakening late in the second quarter, with that trend persisting into the current period.

The company also identified approximately $600 million in anticipated foreign exchange headwinds impacting full-year revenue.

JPMorgan responded swiftly to the announcement. The investment bank lowered its rating on KLAR from Overweight to Neutral while slashing its price objective from $22 to $18, pointing to diminished clarity regarding medium-term business trends. The firm highlighted that Klarna had previously reduced its 2026 projections in February, with JPMorgan warning then that an additional reduction could fundamentally alter the investment thesis.

The bank decreased its second-half 2026 adjusted operating income forecast by approximately 40%.

Key Performance Indicators Show Resilience

The quarterly report contained some positive elements. Gross merchandise volume totaled $36.6 billion in the second quarter, modestly exceeding the anticipated $36.4 billion. The platform gained 9 million active users during the trailing twelve months, pushing the total above 12 million. Revenue per customer on average also increased during the period.

Klarna rolled out its tiered subscription offering across 11 European markets and recently integrated Apple’s device leasing program into the Klarna ecosystem. Chief Executive Sebastian Siemiatkowski indicated that the Apple collaboration is projected to contribute to adjusted operating income growth this year.

The Tuesday selloff represented KLAR’s largest single-session decline since a nearly 27% drop experienced in February.