Klarna Stock Crashes 26% After $26M Loss: Klarna shares crashed 26% after $26 million Q4 loss — here’s what spooked buy now, pay later investors
Klarna Group plc (NYSE: KLAR) is forecasting revenue of $900 million to $980 million for the first quarter of 2026, with a midpoint of $940 million. This falls below the analyst consensus of $966 million. Adjusted operating profit is expected to range widely between $5 million and $35 million, well below the $67.1 million analysts had forecast.
While Q4 2025 revenue rose to $1.08 billion, beating estimates of $1.07 billion, margins and forward guidance disappointed Wall Street. Gross merchandise value is projected to be between $32 billion and $33 billion for the first quarter; This is slightly below the $33.2 billion estimate.
The update signals a year of transition for the fintech lender. Klarna relies on banking products and global partnerships to support long-term growth. However, growth is expected to moderate in the short term. Investors reacted quickly, sending Klarna shares sharply lower and dragging BNPL sentiment with them.
Klarna shares fell 26 percent after the Swedish fintech giant reported a $26 million loss in Q4
Klarna’s fourth quarter results showed strong momentum. GMV rose to $38.7 billion, beating the $38.1 billion consensus forecast and marking a 32% year-over-year increase. This growth rate accelerated from 23% in the third quarter of 2025, reflecting strong holiday shopping activity and expanding retailer integration.
Total revenue rose to $1.08 billion, up from $903 million in the previous quarter and $781 million a year earlier. The revenue capture rate increased to 2.80% from 2.76% in Q3 2024 and 2.66% in Q4 2024. This shows that earning per transaction is increasing.
Average revenue per active consumer increased from $28 to $30 in the 3rd quarter. However, it remained at the same level compared to the same quarter last year. This suggests that user growth remains healthy, but spend per user is stabilizing. Adjusted operating profit reached $47 million, a big improvement from the $14 million loss in the third quarter of 2025. Still, it fell short of the $65.3 million analysts expected.
Credit quality remains a pressure point. The provision for credit losses increased to $250 million from $235 million in the third quarter and $156 million a year ago. Rising credit costs are putting pressure on overall profitability and remain a significant risk for BNPL lenders in a high interest rate environment.
2026 outlook points to slower GMV growth
The biggest concern for investors is the 2026 guidance. Klarna expects GMV to exceed $155 billion for the full year. Analysts were predicting $158.9 billion.
Revenue is expected to exceed 2.8% of GMV, while transaction margin dollars (TMD) are expected to exceed 1.04% of GMV. Adjusted profit margin is estimated to be more than 6.9% of revenue.
In the first quarter of 2026, TMD is expected to grow 11% to 26% annually, reaching $300 million to $340 million. This range indicates operational leverage but also uncertainty regarding the growth rate.
The company said GMV growth will moderate from the second quarter due to tough annual comparisons. In 2025, Klarna experienced rapid growth, driven by strong consumer demand and new merchant registrations. As the base grows, it becomes harder to replicate this growth.
Management emphasized that Fair Finance and Klarna Card adoption will continue to be key drivers of growth. Adil Finansman GMV increased by 165% on an annual basis in the 4th quarter, indicating a strong purchase in long-term installment products. However, as the product scales, percentage growth rates naturally slow down.
Partnerships with Worldpay, JPMorgan and Stripe Expand Total Addressable Market
Klarna is expanding aggressively through major payment partnerships. The company plans to launch partnerships in the event of default with Worldpay and JPMorgan Payments, two of the largest global payment processors.
It also continues to scale integrations with Stripe and Nexi. These alliances significantly increase Klarna’s total addressable market by embedding BNPL options directly into merchant payment systems worldwide.
However, management warned that vendor activation will be gradual. This means it may take several quarters for revenue benefits to materialize. Investors appear concerned that short-term gains will lag behind long-term strategic expansion.
The rollout strategy suggests that Klarna is prioritizing sustainable ecosystem growth over short-term profit acceleration. This approach may appeal to long-term shareholders, but will increase volatility in the near term.
Increasing Credit Costs and BNPL Industry Pressure
The broader Buy Now Pay Later sector is navigating a more challenging macroeconomic environment. High interest rates and cautious consumer spending increase credit risk.
Klarna’s $250 million loan loss provision underscores this challenge. While growth remains strong, rising default reserves could squeeze margins. Investors are watching closely to see if credit trends stabilize in 2026.
Despite the sell-off, Klarna still delivered strong revenue growth and GMV growth in the fourth quarter. The revenue capture ratio improved and adjusted operating profit returned to positive territory on a quarterly basis.
But markets are forward-looking. Slower GMV growth expectations, softer first-quarter earnings guidance and increased loan provisions overshadowed the revenue rise.
Morgan Stanley has warned of execution risks in the US market, signaling the imminent end of the March lockdown, which could introduce additional selling pressure and lower its stock price target.
The CEO noted that accelerated loan originations as part of Klarna’s drive towards “Fair Financing” (long-term installment loans) were the primary driver of the shortfall in Q4; because these loans require upfront credit loss provisions that provide immediate results. Whether this headwind is temporary or structural is the key question investors are asking right now.
