Wondering if Klarna Group might be undervalued, or if the recent market buzz is masking hidden risks? You are definitely not alone, and now is the perfect time to dig deeper.
In the last month, Klarna Group’s stock has dropped by 24.3%, and it is down a striking 36.6% year-to-date. This performance puts the company firmly on the radar of both contrarian investors and those watching for warning signs.
Recently, Klarna has been making headlines with announcements about expanding its payment solutions and forming new partnerships with major retailers. These developments are grabbing investor attention and adding to the stock’s volatility. They could indicate new growth opportunities, but they also raise questions about the sustainability of Klarna’s current strategy and how the market is reacting to these bold steps.
According to our valuation checklist, Klarna Group is undervalued in only 1 out of 6 checks right now. Next, we will break down what the numbers actually say and then show you a smarter way to really understand what “fair value” means for stocks like Klarna.
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 valuation model examines how effectively Klarna Group generates returns above its cost of equity, essentially measuring how much real value is created for shareholders after accounting for the capital invested in the business. This model is especially relevant for financial firms, where return on invested capital and sustainable growth are key drivers of actual intrinsic value.
Looking at Klarna Group’s latest data, the company has a Book Value of $6.32 per share and is projected to achieve a Stable Earnings Per Share (EPS) of $0.27, based on weighted future Return on Equity estimates from 8 different analysts. The estimated Cost of Equity stands at $0.64 per share. However, the calculated Excess Return is negative, at $-0.37 per share. Klarna’s average Return on Equity is a modest 3.37%, with a forecasted Stable Book Value of $8.09 per share, as estimated by 5 analysts.
When applied, the Excess Returns model implies an intrinsic value that is significantly below Klarna’s current share price. The model indicates the stock is overvalued by 15,675.1%. This reflects that Klarna is struggling to generate returns high enough to justify its capital cost and market valuation.
Result: OVERVALUED
Our Excess Returns analysis suggests Klarna Group may be overvalued by 15675.1%. Discover 926 undervalued stocks or create your own screener to find better value opportunities.
KLAR Discounted Cash Flow as at Nov 2025
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Klarna Group.
The Price-to-Sales (P/S) ratio is a favored valuation tool for companies like Klarna Group because it focuses on revenue rather than earnings. This is especially useful for businesses that may be growing rapidly or not consistently profitable, since sales figures tend to be more stable and less affected by accounting adjustments than earnings.
Growth expectations and the overall risk profile significantly influence what would be considered a “normal” or “fair” P/S ratio. Companies with strong growth prospects, higher profit margins, or lower perceived risks typically command higher multiples, while riskier or lower-growth firms receive discounts. The Diversified Financial industry’s average P/S ratio stands at 2.27x, while Klarna’s peers are trading at an average of 3.27x. Klarna Group itself is currently valued at a P/S ratio of 3.64x, meaning investors are paying nearly $3.64 for every $1 of Klarna’s sales, which is above both industry and peer averages.
This is where Simply Wall St’s proprietary “Fair Ratio” provides an added edge. Unlike simple peer or industry comparisons, the Fair Ratio incorporates a company’s unique growth outlook, profit margins, market cap, and level of risk, giving a truer sense of what the stock’s multiple should be today. By factoring in these elements, the Fair Ratio aims to filter out timing-related market distortions and deliver a target multiple based on fundamentals rather than short-term sentiment.
In this case, Klarna’s P/S ratio is notably higher than its industry and peer averages. However, without a Fair Ratio value provided here for comparison, a direct conclusion can’t be drawn. Investors should continue to look for updates to the Fair Ratio for a more complete picture of Klarna’s valuation.
Result: OVERVALUED
NYSE:KLAR PS Ratio as at Nov 2025
PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1430 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there’s an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a simple yet powerful tool that allows you to tell your own story about Klarna Group’s future by connecting your perspective—your assumptions about fair value, revenue growth, and earnings—to a financial forecast. Narratives link the company’s business story to its numbers, showing how your outlook on Klarna translates into an estimated fair value and actionable insights.
On Simply Wall St’s Community page, millions of investors are already using Narratives to quickly visualize whether Klarna Group’s price is above or below what they believe it’s actually worth, helping them decide when to buy or sell. Narratives are updated automatically as new information comes out, keeping your view fresh and relevant in fast-moving markets. For example, some investors might see extraordinary upside and estimate Klarna Group’s fair value at $75, while others set a far more cautious target of $22, reflecting their unique stories and expectations for the business.
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 Nov 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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