Is KLAR a good stock to buy? We came across a bullish thesis on Klarna Group plc on P14 Capital’s Substack. In this article, we will summarize the bulls’ thesis on KLAR. Klarna Group plc’s share was trading at $14.80 as of April 22nd. KLAR’s forward P/E was 25.51 according to Yahoo Finance.
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Klarna Group plc (KLAR) is a global buy-now-pay-later and neobank platform that experienced a sharp post-earnings selloff following a weak print driven primarily by Transaction Margin Dollar (TMD) misses and conservative guidance, despite underlying business momentum remaining intact.
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The thesis argues that Klarna’s decline reflects short-term accounting timing effects rather than fundamental deterioration, as rapid Fair Financing growth has temporarily depressed margins due to upfront credit provisioning while revenue is recognized over time, creating a mismatch expected to normalize as growth moderates.
Klarna demonstrates strong operational expansion with accelerating adoption of its card and neobank ecosystem, doubling active card users, growing merchant partnerships, and expanding its global network, reinforcing its embedded position in digital commerce. Credit concerns are overstated, with delinquency metrics remaining stable, improving underwriting models evidenced by rising Gini scores, and a diversified funding structure supported by a large deposit base reducing reliance on external credit markets.
The balance sheet is a key strength, with cash and securities exceeding market capitalization and net debt negative, providing downside protection and strategic flexibility. Management’s conservative guidance is interpreted as an overcorrection to prior misses, setting a low bar that is likely to be exceeded as execution stabilizes.
Despite near-term volatility and lock-up concerns, the long-term outlook is supported by structural growth in BNPL adoption, expansion in banking services, and increasing merchant penetration. At depressed valuations relative to peers like Affirm, Klarna is viewed as mispriced, with significant upside if margin normalization and revenue growth converge, creating an attractive entry point for long-term investors.
Previously, we covered a bullish thesis on Sezzle Inc. (SEZL) by Next’s Substack in May 2025, which highlighted strong revenue growth, expanding margins, disciplined capital allocation, and founder-led ownership driving a high-quality BNPL compounder. SEZL’s stock price has depreciated by approximately 5.67% since our coverage. P14 Capital shares a similar view but emphasizes Klarna Group plc (KLAR)’s post-earnings selloff driven by TMD timing effects, while maintaining a long-term BNPL and neobank growth outlook.
Klarna Group plc is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 44 hedge fund portfolios held KLAR at the end of the fourth quarter which was 50 in the previous quarter. While we acknowledge the risk and potential of KLAR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KLAR and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
