UBS downgrades Klarna stock rating on guidance cut, executive departures

UBS lowered Klarna's stock rating to Neutral from Buy and reduced its price target to $16.00 from $23.00. This decision came after Klarna's second-quarter 2026 results and a shorter-than-anticipated guidance for gross merchandise volume in the second half of 2026. The stock has experienced a sharp decline, falling 31% in a single week and 50% year-to-date, trading at $14.33, just above its 52-week low of $12.06.

UBS attributes the significant impact of this guidance cut, estimating around $6 billion in annualized effects, to a major decline in international growth expectations, particularly in Germany. The firm also noted that Klarna's chief financial officer and chief marketing officer, long-standing executives, are leaving the company in upcoming quarters.

Despite these challenges, UBS identified company-specific positives such as new distribution partnerships with Apple, expanding card programs, and a burgeoning U.S. Fair Financing business. Klarna's stock currently trades below its Fair Value, and is listed on the platform's undervalued stocks watchlist.