Deutsche Bank analyst Nate Svensson had a 'buy' rating on Klarna Group PLC (Unlisted (US):KLAR) heading into Thursday's results, with a target price of $40. The stock closed at $13.85 after falling 27% on the day.
The headline numbers were not the problem. Gross merchandise volume and revenue both came in slightly ahead of expectations and at the top end of the company's own guidance.
The damage came further down the income statement, where Klarna missed materially on transaction margin and adjusted operating income.
The culprit, Deutsche argues, was a faster-than-expected ramp-up in Klarna's Fair Financing and other banking products, which carry significant upfront costs.
Much of that growth landed in the final weeks of the fourth quarter, squeezing in-period revenue and compressing margins at the worst possible moment.
Painful as the quarterly miss was, it was the full-year guidance that did the real damage.
Klarna's forecast for 2026 came in well below both Deutsche and broader market estimates across every key metric.
Analysts can make a case that the revenue and volume targets reflect a degree of conservatism. The margin outlook is harder to explain away: Klarna guided for adjusted operating margins above 6.9% for the year, against prior expectations of 12% or more.
For investors who bought at the IPO, that gap is difficult to paper over.