Mitchell Martan
Investment Researcher for The Long Investor, Economics/Finance Background
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 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 could reach $50 a share in 2028-2029, though lowered guidance and the macro environment could push it down to $10 first. 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's post-earnings drop looks overdone given the massive volume. The Q3 downtick implies Q4 strength to hit the full-year target. The setup into the print was not great, and it is unclear whether this is a short-term trade or a longer build. 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
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
Affirm and Klarna can take a large share of the credit card market as consumers turn away from predatory cards. Credit cards are over $15 trillion, and buy now, pay later should capture at least 20% of that within 10 years. x.comÂ
SoFi, Klarna, Inter & Co and MercadoLibre are being punished for expanding lending, which is exactly what they need to do to stress-test credit models, gain market share and capture untapped revenue. The temporary losses, margin dips and delinquency creep are necessary experimentation, not failure; algorithmic selling and stop-loss cascades are crushing the shares while fundamentals strengthen for multi-year growth. Inter at 9x earnings is a screaming value anomaly. Patience wins. x.comÂ
Amazon, Meta, MercadoLibre, Reddit, Robinhood and Klarna are great companies trading at a discount because the market is one-sided, with AI stocks taking over even as indexes hit all-time highs. For a long-term investor they are worth buying in stages and holding. x.comÂ