If you are wondering whether Klarna Group is a bargain or a value trap at today’s price, you are not alone. This article unpacks what the current share price really implies.
After sliding 0.4% over the last week and 13.4% in the last month, the stock is now down 31.6% year to date. This move has sharply reset expectations and risk perceptions.
Recent headlines have focused on Klarna’s push to expand its buy now, pay later footprint in key markets and deepen partnerships with major retailers, which many investors view as important for reigniting growth. At the same time, regulators and industry commentators have been scrutinizing the BNPL model more closely, adding a layer of uncertainty that appears to be influencing recent price action.
Right now Klarna Group scores just 1 out of 6 on our valuation checks. We will break down what that means across different valuation methods and then finish by looking at a more intuitive way to think about what the market is really pricing in.
Klarna Group scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Excess Returns model asks a simple question: does Klarna earn enough on its equity to justify its current valuation once the true cost of that equity is accounted for? It looks at what shareholders put into the business versus what they are getting back over time.
For Klarna, the starting point is a Book Value of $6.49 per share and a Stable EPS estimate of $0.27 per share, based on weighted future Return on Equity forecasts from 8 analysts. Against this, the model applies a Cost of Equity of $0.67 per share, implying an Excess Return of $-0.39 per share, meaning Klarna is expected to earn less than its equity cost on a per share basis.
The average Return on Equity is just 3.37%, while the Stable Book Value is projected to rise to $8.09 per share, based on estimates from 5 analysts. When these modest returns are projected forward, the Excess Returns valuation implies an intrinsic value near zero, making the shares look roughly 18179.1% overvalued at today’s price.
Result: OVERVALUED
Our Excess Returns analysis suggests Klarna Group may be overvalued by 18179.1%. Discover 908 undervalued stocks or create your own screener to find better value opportunities.
KLAR Discounted Cash Flow as at Dec 2025
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Klarna Group.
For companies like Klarna that are still normalizing profitability, the price to sales ratio is often the cleanest way to compare value, because it looks at what investors are paying for each dollar of revenue rather than volatile earnings.
In general, faster and more predictable growth, stronger margins and lower risk justify a higher “normal” or “fair” price multiple. Slower growth or higher uncertainty should pull that multiple down. With that in mind, Klarna currently trades on a price to sales multiple of 3.68x. That is slightly above the peer average of 3.65x and well ahead of the broader Diversified Financial industry average of 2.52x, suggesting the market is already paying a premium for Klarna’s growth profile and business model.
Simply Wall St’s Fair Ratio is a proprietary estimate of what Klarna’s price to sales multiple should be once its growth outlook, profitability, risks, industry and market cap are all factored in. This tends to be more informative than a simple peer or industry comparison, which can miss important differences in quality and risk. On this framework, Klarna’s Fair Ratio comes out materially below the current 3.68x, indicating the shares are pricing in more optimism than the fundamentals support.
Result: OVERVALUED
NYSE:KLAR PS Ratio as at Dec 2025
PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1452 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a smarter framework that connects Klarna Group’s story to the numbers behind it. A Narrative is your own, clearly defined view of the company, where you spell out the assumptions that sit behind your fair value, including how fast you think revenue can grow, what margins might look like, and how profitable Klarna can become over time. On Simply Wall St’s Community page, used by millions of investors, Narratives turn those assumptions into a full financial forecast, link that forecast to a fair value estimate, and then compare that fair value to today’s share price to show whether your story implies a buy or a sell. Because Narratives update dynamically as new earnings, news or guidance arrives, they stay in sync with the real world rather than a static spreadsheet. For Klarna, one investor might build a Narrative that assumes strong revenue growth and rising margins, while another might use far lower growth and more modest profitability, leading to very different fair values and decisions.
Do you think there’s more to the story for Klarna Group? Head over to our Community to see what others are saying!
NYSE:KLAR Community Fair Values as at Dec 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include KLAR.
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