Sachin Sharma
Investor, 22+ Years in Oil/Gas/Energy, SLB & MBB Background
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 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 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 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 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'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'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
A clearing of the gloomy environment will make lending stocks the next multibaggers. SoFi, Upstart and Klarna are down now, much as many cybersecurity stocks were before rising two- to fourfold in under six months. Better Home & Finance (-75% YTD), LendingTree (-55%) and Rocket (-47%) join them among lending names whose current prices will look dirt cheap in 2028-2029. x.com 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
