Jim Cramer Notes “I Prefer Affirm to Klarna”

Klarna Group plc (NYSE:KLAR) is one of the stocks Jim Cramer put under the microscope. Cramer said that he likes the company stock at this price and commented:

“So, how does Klarna’s valuation look now? Well, when the Klarna deal priced above the range of $40 per share last night, the company was being valued at just over 15 billion. With the stock opening in the 50s today, that was closer to 20 billion. After the pullback, it’s now valued at over 17 billion, slightly higher than what the venture capitalists were paying earlier this year. I gotta tell you, I kinda like Klarna at this price. I really do.

Using some back-of-the-envelope… let me give you these numbers: I’m expecting Klarna to put up $3.23 billion in sales this year, up 15% from last year. That was its growth rate in the first half, and I’m just kind of projecting it forward. I think that’s reasonable. Using that assumption, stock’s now selling for roughly 5.4 times this year’s sales. Okay, remember this… This is sales. The nice thing is that we have some good publicly traded analogs. Affirm, the best-known buy now, pay later outfit, trades at just under seven times sales. Sezzle, which is more of a second-rate player if you don’t mind, is right around the same level at 6.9 times sales.

Unlike Klarna, those two are profitable though, but Klarna is heading in the right direction. The bottom line: While Klarna roared right out of the gate, the stock hasn’t gone to an insane valuation yet. I think the numbers look good. So I think it can be bought at these levels, even as I make no secret about it, I’ve liked competitor Affirm and its creative CEO Max Levchin for ages. And even up here, I prefer Affirm to Klarna.”

A person with stock market data on a laptop. Photo by Anna Nekrashevich on Pexels

Klarna Group plc (NYSE:KLAR) is a payments technology company that provides solutions in digital banking, advertising, and retail commerce. Its Klarna App serves as an integrated shopping and payment platform.

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Disclosure: None. This article is originally published at Insider Monkey.