JPMorgan Downgrades Klarna (KLAR) to Neutral

JPMorgan analyst Connor Allen downgraded Klarna (NYSE: KLAR) from Overweight to Neutral with a price target of $18.00 (from $22.00).

The analyst comments: “After multiple starts and stops since Klarna's IPO last year, we're stepping to the sidelines; we struggle to have reasonable visibility into medium-term trends and think it will require multiple quarters of clean execution to establish investor confidence and close the valuation gap to best-in-class peers. 2Q results were broadly ahead of expectations and guidance, while the company's 2H outlook was trimmed and it was announced that the CFO and CMO would be departing in 2027. The 2H cut was largely driven by a weaker view around the European macro environment, particularly (but not exclusively) Germany, as consumer discretionary spend slowed materially, ultimately driving a ~40% reduction in our 2H26 AOI. Stepping back, Klarna's original 2026 guidance given in February resulted in a notable cut to our estimates where we acknowledged another step backward could be thesis-changing; at the time we attributed the reduction partially to conservatism (a view further supported by 1Q results coming in ahead), though it also raised questions around business visibility and underlying growth/ profitability dynamics. Now, with 2Q results, the confluence of the 2H guidance cut, an unexpected shift to fair value accounting and a surprising departure of management creates incremental operational and sentiment hurdles for the company. Ultimately, we think it will now take longer to rebuild credibility among investors and we have reduced visibility into medium-term trends.”

For an analyst ratings summary and ratings history on Klarna click here. For more ratings news on Klarna click here.

Shares of Klarna closed at $15.06 yesterday.

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