<div id="readability-page-1"><div> <h2>Key Points</h2><ul><li>Klarna has been diversifying its product line and forging partnerships that expand its reach.</li><li>It reported outstanding growth in the first quarter, driven largely by new products.</li><li>The stock looks attractively priced.</li><li>10 stocks we like better than Klarna Group ›</li></ul>Klarna Group (NYSE: KLAR) stock is a good example of why investing in hot initial public offerings (IPO) is often a bad idea. It was one of the most highly anticipated IPOs of 2025, and it's 62% off its first-day closing price last September.But that was then, and this is now. At the new lower price, it might be attractive. Let's see what's happening at Klarna and whether it makes sense to buy the stock now.Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an &#34;Indispensable Monopoly&#34; providing the critical technology Nvidia and Intel both need. Continue »<h2>Buy now, or buy later?</h2>Klarna is a leader in the buy now, pay later (BNPL) segment. It works with more than 1 million merchants, including Walmart, Macy's, and Airbnb, which feature it as an option on their checkout pages. It also partners with payment services such as Apple Pay and Alphabet's Google Pay.BNPL has become a major part of retail. According to a LendingTree report (NASDAQ: TREE), 47% of Americans say they have used it. Klarna has more than 119 million active consumers using its products in 26 countries, and it processes more than 3.4 million transactions daily.<img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg2ODk0Mi9rbGFybmEtbG9nby1pbi10aW1lcy1zcXVhcmUuanBnJnc9NzAw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg2ODk0Mi9rbGFybmEtbG9nby1pbi10aW1lcy1zcXVhcmUuanBnJnc9NzAw"/>Image source: Klarna. The company's core product is the installment plan called Pay in 4, which splits a purchase into four equal payments due every two weeks or over two months, interest-free. It also offers an interest-free product called Pay in 30 Days, which gives the buyer up to 30 days to pay the full purchase price.Klarna makes money from merchant fees and late fees, and it has a new product called Fair Financing that's basically a longer installment plan with interest charged. This launch has been going better than expected, and Fair Financing gross merchandise volume (GMV) increased 138% year over year in the 2026 first quarter. It also recently launched a membership plan for its credit cards with a robust rewards program for a monthly fee.<h2>Swinging to a profit</h2>Although Klarna has been reporting strong growth since it went public, it's been unprofitable. Making matters worse, the market has been worried about consumer spending as inflation ticks higher. Companies like Klarna rely on a confident consumer who spend, and even more so on well-off consumers to buy bigger-ticket items. In its favor, consumers who might otherwise use a typical credit card transaction need its installment services even more right now.That might be part of why Klarna reported excellent first-quarter earnings, including swinging to a net profit. These were some of the highlights:<ul> <li>Revenue increased 44% year over year.</li> <li>Merchant count was up 49%.</li> <li>The number of active consumers increased 21%.</li> <li>Adjusted operating income increased from $3 million last year to $68 million this year.</li> <li>Net income according to generally accepted accounting principles swung from a $99 million loss to $1 million.</li> </ul>What's emerging is that consumers are using Klarna for far more than just retail purchases. Apparel and accessories actually fell from 39% of GMV to 33% in the quarter, while events and services increased from 10% to 13%, and leisure, which includes sports and hobbies, increased from 9% to 11%. That gives it strength under varied conditions.The diversification of its product offering is helping it reach positive net income. Interest from Fair Financing adds a lucrative revenue stream to the mix, and membership revenue increased 578% year over year in the first quarter.<h2>Rising above the competition</h2>Klarna has many levers to push for increasing growth. It's bringing out new products and forging new relationships; partnerships with JPMorgan Chase's JPMorgan Payments and Worldpay are set to go live in the coming months.According to The Wall Street Journal, Klarna is taking market share from competitors including Affirm and Block's Afterpay. PayPal also has a BNPL product. Klarna is cheaper than all of these companies on a price-to-sales basis, except the struggling PayPal.<img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vbWVkaWEueWNoYXJ0cy5jb20vY2hhcnRzL2M5YmY0Zjc3MGRiMTIyNTZjMzM2MDI0MWMwMjQ5ZjBjLnBuZyZ3PTcwMA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="476" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vbWVkaWEueWNoYXJ0cy5jb20vY2hhcnRzL2M5YmY0Zjc3MGRiMTIyNTZjMzM2MDI0MWMwMjQ5ZjBjLnBuZyZ3PTcwMA"/>KLAR PS Ratio data by YChartsKlarna jumped after beating Wall Street's earnings estimates for the first quarter, but it's still down about 48% year to date. Worries remain as inflation persists, but the company is doing an excellent job diversifying its business and positioning itself for resilience in challenging environments, and it could be a good time to start a position.<h2>Should you buy stock in Klarna Group right now?</h2> Before you buy stock in Klarna Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Klarna Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $469,293!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,381,332!* Now, it’s worth noting Stock Advisor’s total average return is 993% — a market-crushing outperformance compared to 207% for the S&amp;P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of May 19, 2026. JPMorgan Chase is an advertising partner of Motley Fool Money. Jennifer Saibil has positions in Airbnb, Apple, and Walmart. The Motley Fool has positions in and recommends Airbnb, Alphabet, Apple, Block, JPMorgan Chase, Klarna Group, PayPal, and Walmart. The Motley Fool recommends the following options: short June 2026 $50 calls on PayPal. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. </div></div>

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Klarna has diversified its product line and reported strong growth, swinging to a net profit in Q1 with a 44% revenue increase. Despite being down 62% from its IPO, its stock may be attractively priced. Klarna's partnerships and new offerings, like Fair Financing, are enhancing its market position in the buy now, pay later segment. However, concerns about consumer spending persist amid inflation. Analysts suggest caution, as Klarna was not included in the top stock picks by The Motley Fool.

It's Been 8 Months Since Klarna's IPO. Here's What Investors Should Know.