Scott R. Grossman
Founder of Vindico Capital, Consumer-Sector Investor
Klarna is too cheap at 9x 2028 earnings, with strong double-digit annual growth expected even beyond 2030. Its latest results were not that bad. Margins rose, asset quality improved, and the slowdown came solely from softer sales in Germany. x.comÂ
Klarna could reach $50 a share in 2028-2029, though lowered guidance and the macro environment could push it down to $10 first. x.comÂ
Fintech's slide looks like a broad rotation out of the sector rather than isolated company weakness, as investors buy the largest beneficiaries of the AI infrastructure buildout. SoFi is down 43% year to date, with similar weakness at Klarna, Shift4 and Toast, as capital leaves fintech, software and emerging markets for semiconductors, networking, memory and AI infrastructure names such as Nvidia, Broadcom, Micron and Nebius. SoFi CEO Anthony Noto said the decline bothers him. x.comÂ
Klarna's CEO bought $9.9M of shares, a strong signal of confidence. Its exposure to Germany and a weaker consumer economy is an issue but is likely priced in at these levels, and Jim Cramer saying it is not a buy is a contrarian reason to be bullish. x.comÂ
Klarna's weak quarter looks mainly like a European problem, while its US business kept growing strongly with improving profitability. A geographically diversified business can be hurt by one region, but that same breadth means no single region decides everything, unlike many US-only buy-now-pay-later players. x.com x.comÂ
Klarna looks highly undervalued, and the PriceRunner ruling comes at an ideal time, with the post-IPO lock-up behind it and the stock in a bullish technical setup that could clear key Fibonacci and 200-day levels. Backed by solid earnings, it could reach $35-plus by year-end, and the fintech winter appears to have bottomed. x.comÂ
Klarna looks interesting because the market prices in recession and AI fears while its business keeps growing. Revenue is $3.5B, up 25% year over year, and active consumers rose 28% to 118M. Net cash of $3.73B equals $9.88 a share, leaving an enterprise value of only about $2.3B at about $15.70. It cut headcount 49% while doubling revenue with AI, and the stock is down 73% from its IPO high. x.comÂ
Klarna's CEO made a massive $10M insider purchase at the lows this past Wednesday. Many stocks have popped shortly after large insider buys this year, The Trade Desk being the exception. x.comÂ
PayPal's near-flat growth and rising checkout competition leave it a Grade C, prove-it story. Q3 FY26 revenue rose just 2%; operating income fell 8% as restructuring charges rose from $69 million to $255 million, and net income fell 14%. The business still earns over $1 billion a quarter, but it is treading water. x.comÂ
Rising long-term yields threaten SoFi and other fintechs. The US 10-year yield is at its highest in about 30 years, and 10-year yields in Japan, Germany and the UK are also at highs, with Japan's at 2.91%, the highest since 1996. Klarna is the first casualty of this uncertainty, and it will hit SoFi and every other fintech. x.comÂ