Klarna shares face pressure as JPMorgan cuts rating on weaker outlook

Investing.com -- Klarna’s second-quarter results beat expectations, but a weaker second-half outlook, deteriorating European consumer spending and planned management departures have raised concerns over the fintech company’s growth visibility, J.P. Morgan said on Wednesday.

The payments company reported second-quarter gross merchandise volume (GMV) of $36.6 billion, up 18% from a year earlier, while revenue rose 25% on a foreign-exchange-neutral basis to $1.04 billion. Adjusted operating profit reached $91 million, well above J.P. Morgan’s $46 million estimate and the company’s guidance of $30 million to $50 million.

Despite the strong quarter, J.P. Morgan cut its rating on the company to Neutral from Overweight and lowered its price target to $18 from $22. The bank said Klarna’s reduced second-half outlook, a shift to fair-value accounting for certain loans and the planned departures of its chief financial officer and chief marketing officer had created additional operational and sentiment hurdles.

Klarna expects third-quarter GMV to rise 7% to 10%, well below J.P. Morgan’s previous 20% forecast, while revenue is expected at $940 million to $980 million and adjusted operating profit at just $5 million to $15 million. The company also cut its full-year GMV forecast to $149 billion-$151 billion from above $155 billion and lowered adjusted operating profit guidance to $280 million-$300 million from above $299 million.

J.P. Morgan attributed much of the weaker outlook to softer discretionary spending in Germany and elsewhere in Europe, along with foreign-exchange headwinds. Germany accounted for about one-third of Klarna’s GMV in 2025, while revenue growth there slowed to 16% in the second quarter from 22% in the first quarter, with further deterioration expected in the third quarter.

The bank also cut its 2026 revenue estimate to $4.13 billion from $4.40 billion and its 2026 adjusted operating profit estimate to $283 million from $322 million. For 2027, it now expects GMV growth of 14%, down from 18%, and adjusted operating profit of $402 million, compared with its previous estimate of $600 million.

J.P. Morgan said Klarna still has significant growth opportunities through its U.S. expansion, longer-duration loans and partnerships including Apple and Walmart, but argued that several quarters of consistent execution will be needed to rebuild investor confidence.

You May Also Be Interested In

• Volkswagen stock tumbles 7.5% on slashed profit guidance
• Redburn upgrades Southwest, stays bullish on Delta and United
• Wall St slips as higher Treasury yields weigh on sentiment