Klarna Revenue Tops Estimates Amid Strong U.S. Growth, But Shares Fall

Core Insights - Klarna Group reported third-quarter revenue of $903 million, a 26% increase year-over-year, surpassing Wall Street expectations [1] - The company experienced a net loss of $95 million compared to a profit of $12 million in the same quarter last year [1] - Gross merchandise volume (GMV) rose 23% to $32.7 billion, exceeding estimates of $31.73 billion [2] Financial Performance - Klarna's CEO stated that Q3 was the strongest quarter ever, with U.S. revenue up 51% and GMV up 43% [3] - For the upcoming December quarter, Klarna expects revenue between $1.065 billion and $1.080 billion, compared to estimates of $1.057 billion [3] Strategic Developments - Elliott Investment Management has agreed to purchase loans from Klarna in a two-year term agreement, potentially involving up to $6.5 billion in loans [4] - Klarna's "fair financing" offering allows customers to pay for larger purchases in fixed monthly installments, typically over a longer period than interest-free options [4] Market Position - Klarna is a leading provider of buy now, pay later (BNPL) services, competing with companies like Affirm Holdings, Block's Afterpay, and PayPal [5][7] - Klarna's stock has seen volatility, retreating 25% in 2025 prior to the Q3 earnings release, amid concerns over consumer credit deterioration [5] Stock Performance - Klarna's initial public offering (IPO) in September raised $1.37 billion, with backing from venture firms like Sequoia Capital [6] - The stock currently holds an IBD Composite Rating of 7, indicating it is below the threshold for top growth stocks [7] - Klarna's Accumulation/Distribution Rating is E, suggesting more funds are buying than selling [8]