Klarna swings to loss, shares tumble

(Sharecast News) - Klarna tanked on Thursday after the 'buy now, pay later' firm said it swung to a full-year loss despite a jump in revenues.

In the year to the end of December, the company swung to a net loss of $273m from a profit of $21m the year before, while total revenue rose to $3.5bn from $2.8bn.

In the fourth quarter, the Stockholm-based group swung to a net loss of $26m from a profit of $40m in the same period a year earlier, while total revenue was 38% higher at $1.1bn. This was the company's first billion-dollar quarter and revenue was above guidance, but analysts had been expecting a Q4 loss closer to $10m.

Klarna said its consumer base expanded to 118m active consumers in the fourth quarter, up 28% year-over-year, while the number of merchants using it grew 42% to 966,000.

The company's shares sank 26% on the results.

Danni Hewson, head of financial analysis at AJ Bell, said: "It's been a tough day for 'buy now, pay later' services provider Klarna. Its shares have dropped sharply after it reported a wider than expected loss despite rising revenue.

"Today's fall takes the drop in share price since its September IPO to almost 70%, challenging company bosses to maintain investor confidence. Whilst promises of jam tomorrow are frustrating for those who'd rather enjoy their jam today, the company is growing rapidly and navigating away from the short-term loans to cover retail purchases that it is best known for.

"Making use of AI has been at the forefront of the company's cost cutting efforts and it is adding customers for products like its debit card and more traditional loans. But with consumers still under pressure from the uncomfortable cost of living, there will be concern about the ability of some people to keep up their payments, as well as the impact from increased regulation on the sector."