Klarna (KLAR) Stock Forecast & Price Target

Klarna has demonstrated impressive growth, with the number of merchants increasing by over 201,000, representing a 34% year-over-year rise in the second quarter, indicating strong demand for its payment solutions among retailers. The company's improved net charge-offs, attributed to the maturation of its underwriting models and successful scaling in markets like the US and UK, further underscores its financial stability and risk management effectiveness. As the buy now, pay later market is projected to grow significantly, with estimated payment values in the US reaching $116.7 billion this year and a compound annual growth rate of 12% expected through 2028, Klarna stands to benefit from this expanding market landscape.

Klarna has reported realized losses of 0.45% of gross merchandise volume (GMV) in the second quarter of 2025, which reflects a slight decrease of 3 basis points year-over-year, indicating potential financial strain. Additionally, there are indications that GMV per merchant has been declining over recent quarters, attributed to a trend in which smaller retailers are joining the network alongside a focus on larger brands. The competitive landscape is further challenged by the anticipated rapid decline in cash usage in less developed countries, which may underscore the growth of credit card and digital payments, potentially impacting Klarna's market share and profitability.