Klarna: 2Q26 Recap - Another Cut to 2026 Raises Questions Around Visibility, Compounded by Mgmt Departures; Moving to N from OW

Research evidence excerpt

J P M O R G A N

North America Equity Research

19 August 2026

Klarna

2Q26 Recap - Another Cut to 2026 Raises Questions

Around Visibility, Compounded by Mgmt Departures;

Moving to N from OW

▼Neutral

Previous: Overweight

KLAR, KLAR US

Price (18 Aug 26):$15.06

▼Price Target (Dec-27):$18.00

Prior (Dec-26):$22.00

After multiple starts and stops since Klarna's IPO last year, we're stepping to the

sidelines; we struggle to have reasonable visibility into medium-term trends and

think it will require multiple quarters of clean execution to establish investor

confidence and close the valuation gap to best-in-class peers. 2Q results were

broadly ahead of expectations and guidance, while the company's 2H outlook was

trimmed and it was announced that the CFO and CMO would be departing in 2027.

The 2H cut was largely driven by a weaker view around the European macro

environment, particularly (but not exclusively) Germany, as consumer

discretionary spend slowed materially, ultimately driving a ~40% reduction in our

2H26 AOI. Stepping back, Klarna's original 2026 guidance given in February

resulted in a notable cut to our estimates where we acknowledged another step

backward could be thesis-changing; at the time we attributed the reduction

partially to conservatism (a view further supported by 1Q results coming in ahead),

though it also raised questions around business visibility and underlying growth/

profitability dynamics. Now, with 2Q results, the confluence of the 2H guidance

cut, an unexpected shift to fair value accounting and a surprising departure of

management creates incremental operational and sentiment hurdles for the

company. Ultimately, we think it will now take longer to rebuild credibility among

investors and we have reduced visibility into medium-term trends. As a result, we

prefer to step to the sidelines and move to a Neutral rating on Klarna shares (from

Overweight) with a $18 price target.

2Q Headline Summary. GMV increased 18% y/y (or 15% like-for-like,

decelerating 7ppt sequentially from +22% in 1Q) to $36.6B, coming in slightly

ahead of JPMe ($36.3B), Street ($36.4B) and guidance ($35.5B - $36.5B).

…