Jim Cramer Says “Klarna is Fine”

Klarna Group plc (NYSE:KLAR) is one of the stocks Jim Cramer recently discussed. When a caller mentioned that they want to exit AXP, as they think that Stephen Squeri is “in over his head”, and invest in KLAR, Cramer commented:

“No, I won’t let you do that. I don’t think Squeri’s in over his head at all. I think he’s actually a, I think he, in his own way, is a genius. He’s figured out what younger people want… I reactivated my platinum card yesterday and… you know what, Squeri, he just figured it out. He makes us happy. I think he’s a very good executive. Klarna is fine, but Squeri, let’s just say, he’s figured it out.”

A technical stock market chart. Photo by Energepic from Pexels

Klarna Group plc (NYSE:KLAR) is a technology-driven payments company that provides payment solutions, digital retail banking, and advertising services to consumers and merchants. Cramer highlighted the stock during the September 10 episode and said:

“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.”

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