Klarna Faces IPO-Related Securities Class Action Over Rising Loan Loss Provisions

New updates have been reported about Klarna.

Klarna Group plc is facing a securities class action lawsuit alleging that its September 10, 2025 initial public offering (IPO) materials failed to adequately disclose the risk of rising loan loss provisions tied to its buy now, pay later portfolio. The complaint, brought on behalf of investors who purchased Klarna shares pursuant or traceable to the IPO, claims the company and its executives understated the likelihood that loss reserves would need to increase materially within months of the listing, given the risk profile of many consumers using Klarna’s installment products. Klarna’s IPO raised capital through the issuance of roughly 34 million shares at $40 per share on the New York Stock Exchange, positioning the company as a major public player in payments, advertising, and digital retail banking.

According to the lawsuit, investor concerns intensified after a November 18, 2025 Bloomberg report disclosed that Klarna posted a net loss of $95 million as it boosted reserves for potentially deteriorating loans. The article cited provisions of $235 million, exceeding analyst expectations of $215.8 million, and noted that provisions rose to 0.72% of gross merchandise volume from 0.44% a year earlier, highlighting accelerating credit risk costs within Klarna’s business model. Following these developments, Klarna’s share price declined to about $31.31, well below the IPO price and central to investor loss claims. While the litigation is still at an early stage and no liability has been established, the case underscores key risks for Klarna’s profitability and capital markets reputation: higher credit provisions, increased regulatory and investor scrutiny of BNPL risk management, and potential future constraints on funding costs and strategic flexibility if the allegations gain traction or lead to material settlements or judgments.