Shares in Klarna plummeted by more than 25% after the Swedish buy now, pay later provider swung to a net loss in the fourth quarter and increased provisions for credit losses.
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Having seen its price fall by more than 25% on Thursday, Klarna’s stock continued on its downward trend on Friday. Since securing a $15 billion valuation on its market debut in September, the company’s share price has now dropped by more than two thirds.
Despite posting its first billion dollar revenue quarter, Klarna reported that Q4 also saw a $26 million net loss, compared to a $40 million profit in the same period the previous year – missing an average forecast loss among analysts of under $10 million, according to Reuters.
The loss is in large part down to an increase in the amount the fintech giant has set aside for credit losses in the quarter – $250 million, which is 60% up on the same period in 2024.
In an analyst call, reported by the Financial Times, Klarna CEO Sebastian Siemiatkowski said the change was a consequence of the growth of a ‘Fair Financing’ product, a longer-term loan that bears interest.
“The more we grow in these [Fair Financing loans] the more profit we’re generating for the future. So the real question is simply: Do we want to make more money, even if it means slightly less today, to make significantly more tomorrow?” said Siemiatkowski.
Klarna has also been working hard to diversify beyond BNPL via its digital bank, which has doubled its customer base over the last year to 15.8 million users.
Said Siemiatkowski in a statement: “We’ve been executing on a clear plan: acquire customers through seamless payments, then deepen those relationships into banking. Q4 showed that people want a bank that works for them, not against them.
“The number of our banking consumers has doubled in the past year, generating more than three times the revenue of our average consumers. Consumers are moving away from predatory revolving credit and we’re building the transparent alternative they deserve.”
