KLAR Stock Attempts Bounce After Record Crash – Morgan Stanley Urges ‘Meaningfully More Profitable’ Turn

• Wells Fargo said Klarna’s transaction margin expectations look light.
• Keefe Bruyette, however, raised its price target to $26 from $25 and kept an ‘Overweight’ rating.
• The company reported a Q4 net loss of $26 million, compared with a $40 million profit a year earlier.

Shares of Klarna Group (KLAR) found some respite in pre-market trading on Friday, a day after suffering their steepest intraday drop on record, as investors reacted negatively to the company’s fourth-quarter net loss and a weaker-than-expected outlook for the current quarter.

KLAR stock was trading 2% higher at the time of writing. According to Stocktwits data, retail chatter on the platform increased by more than 1,640% over the past 24 hours.

Q4 Net Loss, Weak Guidance Overshadow Revenue Growth 

KLAR shares closed nearly 27% lower on Thursday, after the company reported a Q4 net loss of $26 million, compared with a $40 million profit a year earlier. It was significantly wider than Street’s estimate of a loss of $8.8 million. Revenue rose 38% to $1.08 billion, slightly above estimates.

For the first quarter of fiscal 2026, Klarna expects revenue of $900 million to $980 million, compared with estimates of $965.1 million. Gross merchandise value is projected at $32 billion to $33 billion, also below consensus estimates.

Analysts Split: Klarna’s Profitability Takes Centre Stage

Brokerage reactions were mixed, as Wells Fargo and Morgan Stanley diverged from Keefe Bruyette’s stance and lowered their price targets on the stock, according to The Fly.

Morgan Stanley lowered its price target on Klarna to $16 from $23 and maintained an ‘Equal Weight rating, signaling a 15% upside to the stock’s closing price of $13.85 on Thursday. The firm added that the stock’s 27% drop after earnings shows how urgently Klarna must focus on “becoming more meaningfully profitable”.

Wells Fargo cut its price target to $32 from $45 but maintained an ‘Overweight’ rating. The firm said Klarna beat fourth-quarter estimates for gross merchandise value and revenue, but transaction margins missed expectations due to increased use of its banking and financing products, and margin guidance looked light.

Meanwhile, Keefe Bruyette raised its price target on Klarna to $26 from $25 and kept an ‘Outperform’ rating.

Retail Traders Turn ‘Extremely Bullish’ 

Retail sentiment on Stocktwits turned ‘extremely bullish’ from ‘bullish’ a day earlier, amid ‘extremely high’ message volumes. KLAR was also among the top trending tickers on the platform at the time of writing.

One user noted two price gaps on the chart at $18.84 and $25.45 and expects the stock to climb to $18 in the next couple of weeks.

Another user expects a 4-5% dead cat bounce (DCB). DCB is a temporary recovery in a downtrend.

The stock has tanked more than 50% so far in 2026.

Read also: Why Did EVTV Stock Surge 22% In Pre-Market Today?

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