Klarna Faces Securities Class Action Over Disclosures on Credit Loss Provisions After IPO

New updates have been reported about Klarna.

Klarna Group plc is facing a federal securities class action alleging that the company and its executives misled investors about the risks and trajectory of its credit loss provisions in connection with its September 2025 initial public offering on the NYSE. The complaint, which Faruqi & Faruqi, LLP is investigating and seeking a lead plaintiff for by February 20, 2026, claims Klarna materially understated the likelihood that loss reserves would rise significantly within months of the IPO, given the risk profile of consumers using its buy now, pay later loans. Plaintiffs argue that the registration statement and related prospectus omitted or downplayed this risk, rendering Klarna’s public statements false, misleading, and negligently prepared, thereby inflating the stock price at the time of issuance.

The litigation gained momentum after a November 18, 2025 Bloomberg report, carried by Yahoo! Finance, highlighted that in Klarna’s first earnings release as a public company, it delivered record third-quarter revenue that beat estimates but substantially increased provisions for credit losses. Klarna reported a net loss of $95 million, with provisions for loan losses at $235 million versus analyst expectations of $215.8 million, and provisioning rising to 0.72% of gross merchandise volume from 0.44% a year earlier. Following this disclosure, Klarna’s shares fell 9.3% on November 18, 2025, which the lawsuit cites as evidence of investor harm once the market absorbed the higher risk profile of the loan book. If the claims are upheld, Klarna could face financial liabilities, potential revisions to disclosure practices, and greater scrutiny of its BNPL underwriting and reserving policies, with implications for future capital-raising, regulatory perception, and investor confidence.