1 Under-the-Radar Stock That Insiders Are Buying Up Now

Company Overview - Klarna Group is a global digital bank and payment services provider, primarily known for its buy now, pay later service, serving 118 million active consumers and 966,000 merchants across 26 markets [2] - The company processes 3.4 million transactions per day and has a market capitalization of approximately $11.4 billion [2] Stock Performance - Klarna's stock (KLAR) is currently trading at $14.92, significantly lower than its 52-week high of $57.20, indicating a poor stock performance compared to the overall market [1][3] - Despite a recent modest bounce, the stock remains well below its peak, reflecting investor concerns about profitability and credit provisioning [3] Insider Buying - Notable insider buying occurred recently, with Chairman Michael Moritz acquiring 3.47 million shares for approximately $49.9 million and Chief Product & Design Officer David Fock buying 27,000 shares [4] - This insider buying is significant as it took place after the lock-up expiration, a period typically associated with selling pressure [4] Financial Performance - In Q4 2025, Klarna reported a revenue growth of 38% year-over-year to $1.082 billion, marking its first billion-dollar quarter [7] - Gross merchandise volume grew 32% to $38.7 billion, with U.S. revenue increasing by 58% [7] - For the full year 2025, revenue grew 25% to $3.5 billion, and adjusted operating profit was $65 million [7] Banking Segment Growth - Klarna's banking customers grew 101% year-over-year to 15.8 million, generating $107 in revenue per user compared to $30 for average users [8] - The Klarna Card user base expanded to 4.2 million, indicating a shift towards monetizing existing customers through various banking products [9] Credit Quality and Provisions - The management acknowledged that the rapid rollout of banking products led to higher day-one provisioning, impacting transaction margins [10] - Provisions for credit losses improved sequentially to 0.65% of GMV in Q4 from 0.72% in Q3, suggesting that margin deterioration is not solely due to credit quality issues [10] Analyst Expectations - Analysts maintain a "Moderate Buy" rating for KLAR stock, with a high target of $46, a mean target of $24.38, and a low target of $16 [11] - The current stock price of $14.92 suggests a potential upside of about 63% based on the mean target, indicating perceived value despite associated risks [11]