Assessing Klarna Group (KLAR)’s Valuation After Recent Share Price Swings

Klarna Group (KLAR) has been on investors’ radar after its recent share price swings, with the stock up over 1% today but still down sharply over the month and year to date.

See our latest analysis for Klarna Group.

That mix of a 1 day share price return of 1.93% against a 30 day share price return of minus 18.09% and a year to date share price return of minus 33.22% suggests short term bargain hunters are stepping in while longer term momentum is still clearly fading.

If Klarna’s swings have you rethinking your watchlist, this could be a good moment to explore fast growing stocks with high insider ownership for other compelling ideas.

With Klarna trading about 50% below analyst targets but still loss making despite rapid revenue and earnings growth, is this volatility signalling a genuine undervaluation, or is the market already pricing in every ounce of future expansion?

Price-to-Sales of 3.6x: Is it justified?

Klarna Group trades on a price-to-sales ratio of 3.6 times, which makes the current 30.6 dollar share price look expensive against peers.

The price-to-sales multiple compares the market value of the company to the revenue it generates. It is a common yardstick for fast growing but loss making fintech and diversified financials businesses.

With Klarna still unprofitable yet expected to improve earnings rapidly, this elevated price-to-sales ratio suggests investors are already paying up for anticipated future scale and margin gains rather than current performance.

Compared to both the broader US diversified financials industry average of 2.6 times sales and a peer group average of 3.5 times, Klarna’s 3.6 times ratio implies investors are assigning a premium price tag for its growth story rather than a discount.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Sales of 3.6x (OVERVALUED)

However, sustained losses and any slowdown in its near 20 percent annual revenue growth could quickly turn this perceived growth premium into a painful de-rating.

Find out about the key risks to this Klarna Group narrative.

Another View: Our DCF Model Paints a Harsher Picture

While the 3.6 times sales multiple hints at a growth premium, our DCF model is far more cautious. It puts fair value near 0.17 dollars, which implies Klarna is heavily overvalued at today’s 30.6 dollars. Is the market right, or is this optimism set up for disappointment?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Klarna Group for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 915 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Klarna Group Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a custom view in just minutes: Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Klarna Group.

Ready for your next move?

Before Klarna’s story moves on without you, consider finding your next opportunity using the Simply Wall Street Screener to surface candidates that may better fit your portfolio.

• Explore potential opportunities in companies trading on lower valuations by targeting those screened as these 915 undervalued stocks based on cash flows based on their future cash flows.
• Focus on structural growth themes by zeroing in on innovators involved in the future of medicine with these 30 healthcare AI stocks.
• Strengthen your income stream by considering companies identified through these 14 dividend stocks with yields > 3% that currently offer yields above 3%.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com