Klarna (NYSE:KLAR) Expands Apple Pay Access: Assessing the Valuation After Latest Growth Push

Klarna Group (NYSE:KLAR) has rolled out its flexible payment options on Apple Pay in Denmark, Spain, and Sweden, expanding access to its 'buy now, pay later' solutions. Investors may see this as another step in Klarna's broader growth strategy.

See our latest analysis for Klarna Group.

Klarna’s global push, including its latest Apple Pay integration, underscores ambition but hasn’t translated to share price strength just yet. The stock’s year-to-date share price return is down nearly 31%. While recent product news hints at growth potential ahead, momentum in the market is still recovering from this year’s slide.

If Klarna’s big expansion plans have you thinking beyond payments, now’s a smart time to broaden your search and discover fast growing stocks with high insider ownership

With shares still lagging despite Klarna’s surging revenue and ongoing product launches, the key question is whether investors are overlooking real upside or if the path to future growth is already reflected in the price.

Price-to-Sales Ratio of 4x: Is it justified?

Klarna shares are currently priced with a Price-to-Sales (P/S) ratio of 4x, which stands noticeably above both the US Diversified Financial industry average and its peers. At a last close of $31.63, the stock looks expensive in comparison to these benchmarks.

The Price-to-Sales multiple shows how much investors are willing to pay per dollar of Klarna’s revenue. For growing fintech and payment companies, this ratio is a useful gauge when earnings are negative or profits are still a work in progress.

This higher-than-average P/S ratio suggests that the market is pricing in substantial future growth or competitive advantages for Klarna. However, by sector standards, it also points to a premium being placed on the company’s growth potential, not its current earnings base.

• Klarna’s P/S ratio (4x) is significantly above the US Diversified Financials industry average (2.4x).
• It also exceeds the peer group average (3.2x), indicating a notable valuation premium over its closest rivals.

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

Result: Price-to-Sales of 4x (OVERVALUED)

However, slowing revenue growth or continued net losses could challenge the case for Klarna’s current premium. This could potentially shift market sentiment swiftly.

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

Another View: Discounted Cash Flow Paints a Stark Picture

Looking at Klarna through the lens of our SWS DCF model offers a strikingly different conclusion. The DCF suggests Klarna shares could be worth just $4.15, which is much lower than today's price of $31.63. This model points to substantial overvaluation and raises tough questions about future growth and profitability expectations.

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 907 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 think there’s more to Klarna’s story or want to dig deeper into the numbers, you can put together your own take in just a few minutes. Do it your way.

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

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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.

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