Klarna shares crashed 26% after $26 million Q4 loss — here’s what spooked buy now, pay later investors

Klarna shares crashed 26% after $26 million Q4 loss: Klarna stock plunged 26% in early Thursday trading after the Buy Now, Pay Later (BNPL) giant reported a 2025 net loss and issued softer-than-expected 2026 guidance. The sharp selloff came despite strong fourth-quarter revenue growth, as investors focused on slowing gross merchandise value (GMV) growth, weaker adjusted profit expectations, and rising credit loss provisions.

Klarna Group plc (NYSE: KLAR) forecast first-quarter 2026 revenue between $900 million and $980 million, with a midpoint of $940 million. That falls below the $966 million analyst consensus. Adjusted operating profit is expected in a wide range of $5 million to $35 million, significantly lower than the $67.1 million analysts projected.

While Q4 2025 revenue rose to $1.08 billion, topping estimates of $1.07 billion, margins and forward guidance disappointed Wall Street. Gross merchandise value is projected at $32 billion to $33 billion for Q1, slightly under the $33.2 billion estimate.


The update signals a transition year for the fintech lender. Klarna is betting on banking products and global partnerships to drive long-term growth. But near-term growth is expected to moderate. Investors reacted swiftly, sending Klarna shares sharply lower and dragging broader BNPL sentiment with it.

Klarna shares crashed 26% after the Swedish fintech giant reported a $26 million Q4 loss

Klarna’s fourth-quarter results showed solid top-line momentum. GMV climbed to $38.7 billion, beating the $38.1 billion consensus estimate and marking a 32% year-over-year increase. That growth rate accelerated from 23% in Q3 2025, reflecting strong holiday shopping activity and expanded merchant integration.

Total revenue jumped to $1.08 billion from $903 million in the prior quarter and $781 million a year earlier. The revenue take rate improved to 2.80%, up from 2.76% in Q3 and 2.66% in Q4 2024. This indicates improved monetization per transaction.

Average revenue per active consumer increased to $30 from $28 in Q3. However, it remained flat compared with the same quarter last year. That suggests user growth remains healthy, but spending per user is stabilizing.

Adjusted operating profit reached $47 million, a major improvement from a $14 million loss in Q3 2025. Still, it fell short of the $65.3 million analysts expected.

Credit quality remains a pressure point. Provision for credit losses climbed to $250 million, up from $235 million in Q3 and $156 million a year earlier. Rising credit costs are weighing on overall profitability and remain a key risk for BNPL lenders in a higher-rate environment.

2026 outlook signals slower GMV growth

The bigger concern for investors is 2026 guidance. Klarna expects GMV to exceed $155 billion for the full year. Analysts had estimated $158.9 billion.

Revenue is projected to exceed 2.8% of GMV, while transaction margin dollars (TMD) are expected to surpass 1.04% of GMV. Adjusted profit margin is forecast at more than 6.9% of revenue.

For Q1 2026, TMD is expected to grow 11% to 26% year over year, reaching $300 million to $340 million. That range shows operational leverage but also uncertainty around growth pace.

The company said percentage GMV growth will moderate beginning in Q2 due to tough year-over-year comparisons. In 2025, Klarna saw rapid expansion driven by strong consumer demand and new merchant sign-ups. Replicating that growth becomes harder as the base gets larger.

Management emphasized that Fair Financing and Klarna Card adoption will remain key growth drivers. Fair Financing GMV surged 165% year over year in Q4, signaling strong uptake of longer-term installment products. However, as that product scales, percentage growth rates naturally slow.

Partnerships with worldpay, JPMorgan, Stripe Expand Total Addressable Market

Klarna is expanding aggressively through major payment partnerships. The company expects to launch default-on partnerships with Worldpay and JPMorgan Payments, two of the largest global payment processors.

It is also continuing to scale integrations with Stripe and Nexi. These alliances materially increase Klarna’s total addressable market by embedding BNPL options directly into merchant checkout systems worldwide.

However, management cautioned that merchant activation will be gradual. That means revenue benefits may take several quarters to materialize. Investors appear concerned that near-term earnings will lag behind long-term strategic expansion.

The rollout strategy suggests Klarna is prioritizing sustainable ecosystem growth over short-term profit acceleration. That approach may appeal to long-term shareholders but adds volatility in the near term.

Rising Credit Costs and BNPL Industry Pressure

The broader Buy Now, Pay Later industry is navigating a tougher macroeconomic backdrop. Higher interest rates and cautious consumer spending are increasing credit risk exposure.

Klarna’s $250 million credit loss provision underscores that challenge. While growth remains strong, rising delinquency reserves can compress margins. Investors are watching closely to see whether credit trends stabilize in 2026.

Despite the selloff, Klarna still posted strong revenue expansion and accelerating GMV growth in Q4. Its revenue take rate improved, and adjusted operating profit returned to positive territory on a quarterly basis.

But markets are forward-looking. Slower GMV growth expectations, softer Q1 earnings guidance, and rising credit provisions overshadowed the headline revenue beat.

Morgan Stanley warned about execution risks in the US market and flagged a looming March lock-up expiration that could unleash additional selling pressure, cutting its price target on the stock.

The CEO pointed to accelerated loan originations — part of Klarna's push into "Fair Financing" (longer-term installment loans) — as the primary driver of the Q4 shortfall, since those require upfront credit loss provisions that hit the bottom line immediately. Whether that headwind is temporary or structural is the key question investors are now asking.