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Klarna’s Stark Financial Downturn: Stock Takes a Hit

Jack KelloggAvatar
Written by Jack Kellogg Reviewed by Ellis Hobbs Fact-checked by Matt Monaco
Updated 2/20/2026, 4:40 pm ET 2/20/2026, 4:40 pm ET | 5 min 5 min read
Klarna’s Stark Financial Downturn: Stock Takes a Hit Thumbnail

Klarna Group plc stocks have been trading down by -5.13 percent amid market uncertainty and investor caution.

Finance industry expert:

Analyst sentiment – negative

Klarna (KLAR) is currently confronting significant financial challenges, reflecting its weakened market position since its IPO. The company has reported a revenue of $2.81 billion but its financial ratios are underwhelming. With a price-to-sales ratio of 4.85 and a high price-to-book value of 5.83, Klarna appears overvalued relative to its tangible book value. Furthermore, the company’s leverage ratio stands at 8.2, highlighting considerable debt concerns. The absence of profitability indicators such as return on assets and equity is worrisome, emphasizing a lackluster performance trajectory. Key insights reveal a substantial negative retained earnings figure of -$2.283 billion, indicating historical losses impacting shareholders’ equity, compounded by a stockholders’ equity of only $2.338 billion against total liabilities of $16.679 billion.

The recent technical analysis of Klarna’s weekly price movement indicates a pronounced downtrend. The latest data captures a descending pattern from a high of $19.8 to a closing low of $13.12. This enduring downward momentum suggests bearish sentiment. The significant volume spikes following negative earnings announcements align with heavy sell-offs. Traders might capitalize on this trend by shorting the stock at resistance levels around $13.95, with a target sell point near its recent lows. Monitoring for increased volume on any advance, especially above $13.85, is crucial as it may signify potential buying interest or knee-jerk reversals.

Klarna is currently embroiled in multiple class action lawsuits, alleging potential securities fraud related to the misrepresentation of credit risks and understated loss reserves following its IPO. The lawsuits cast a shadow over its risk management practices within the BNPL sector. Following an unexpected 2025 net loss of $0.79 per share, the stock plunged 25%. This rapid devaluation has positioned Klarna poorly compared to finance sector benchmarks, both in reputation and financial resilience. Given the intense downward price action and legal uncertainties, investors should watch support at $10 and resistance around the $14 mark. Overall, the outlook remains negative due to financial instability and litigation risks weighing heavily on future prospects.

Candlestick Chart

Weekly Update Feb 16 – Feb 20, 2026: On Friday, February 20, 2026 Klarna Group plc stock [NYSE: KLAR] is trending down by -5.13%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Quick Financial Overview

Klarna’s recent financial disclosures reveal challenging times, marked by a dramatic shift from profitability to a net loss in 2025. The earnings per share of a negative $0.79 starkly contrasts the previous year’s performance, exacerbating investor concerns. This reversal has underscored vulnerabilities in the company’s financial health, specifically related to its ‘buy now, pay later’ borrower risks.

Analyzing KLAR’s financial strength unveils a company grappling with heavy liabilities and diminished equity. Despite a total asset base of approximately $19.2B, liabilities overshadow this figure at $16.67B, reflecting a strained balance sheet. Especially notable is the receivables turnover, indicating potential cash flow issues linked to delayed payments. Moreover, the company’s valuation ratios such as price-to-sales and price-to-tangible book point to significant challenges in positioning itself favorably in capital markets.

More Breaking News

The intraday trading data from February 19, 2026, provides additional insight. After an opening of $13.85, the stock oscillated, with frequent fluctuations suggesting a volatile investor sentiment heavily reacting to the ongoing financial turmoil. The rollercoaster ride in price indicates a jittery market, waiting for stabilization in both Klarna’s financials and the broader economic context.

Conclusion

The breadth of challenges Klarna faces indicates a period of restructuring and strategic reevaluation. The confluence of financial losses and litigation risks presents a pivotal moment demanding robust risk management and transparency restoration. Operational revamps focusing on more secure business practices could potentially reassure and realign trader expectations. However, cautious navigation will be essential to stabilize the market impact and regain stockholder trust in the long term.

As Klarna strategizes to overcome current hurdles, the market will closely watch its moves in adaptation and accountability, given the economic pressures and stakeholder demands for clarity and assurance. In these tumultuous times, it is crucial to heed the advice of seasoned traders. As millionaire penny stock trader and teacher Tim Sykes says, “There is always another play around the corner; don’t chase just because you feel FOMO.” This mindset could be pivotal for Klarna to maintain focus on long-term goals rather than succumbing to short-term pressures.

This is stock news, not investment advice. Timothy Sykes News delivers real-time stock market news focused on key catalysts driving short-term price movements. Our content is tailored for active traders and investors seeking to capitalize on rapid price fluctuations, particularly in volatile sectors like penny stocks. Readers come to us for detailed coverage on earnings reports, mergers, FDA approvals, new contracts, and unusual trading volumes that can trigger significant short-term price action. Some users utilize our news to explain sudden stock movements, while others rely on it for diligent research into potential investment opportunities.

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Jack Kellogg

He teaches webinars on Tim Sykes’ Trading Challenge He became Tim’s youngest millionaire student in 2020. Now he’s second on the Trading Challenge leaderboard with $12.9 million in career earnings. He’s a master of the 7-Step Pennystocking Framework. Jack is one of a rare breed of traders to profitably trade the entire penny stock framework.
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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”