Klarna Stock (KLAR) Rebounds Amid Valuation Debate: Is It a Bargain?

Klarna Holdings AB (KLAR) has emerged as a focal point in the fintech sector, with its stock climbing to $5.70 in early January 2026 after a period of sustained pressure. The rebound follows a 40% decline from its 2023 peak, raising questions about whether current levels represent an undervalued entry point. The company reported Q3 2025 revenue of SEK 12.3 billion ($1.2 billion), marking a 14% year-over-year increase, though net loss widened to SEK 1.8 billion ($180 million), driven by continued investments in international expansion and credit risk provisioning. Market participants are closely examining Klarna’s adjusted EBITDA, which improved to a loss of SEK 420 million in Q3, down from SEK 710 million in the same period last year. This narrowing loss, coupled with a 22% rise in active users to 125 million globally, suggests underlying operational progress. However, the stock’s price-to-sales ratio stands at 1.3x, below the fintech sector average of 1.8x, which some analysts interpret as a potential discount given Klarna’s scale and recurring revenue stream from merchant services. Investor sentiment remains cautious, with short interest accounting for 18% of the float as of January 10, 2026. The company’s long-term debt of SEK 24 billion ($2.4 billion) and ongoing efforts to reduce reliance on high-cost capital have prompted skepticism about its path to profitability. Meanwhile, competitive pressures from Affirm, Zip Co, and traditional banks have intensified, particularly in Europe and North America. The broader fintech and payment processing sector has seen increased volatility, with KLAR’s price movement influencing related stocks such as PAYX and SQ. Institutional flows indicate a modest net buying in late December, suggesting selective optimism despite macroeconomic headwinds and tighter credit conditions.