Klarna Faces Securities Class Action Over IPO Credit-Risk Disclosures as Loss Provisions Surge

New updates have been reported about Klarna.

Klarna Group plc is at the center of a securities class action alleging that its September 2025 IPO documents understated the company’s credit risk exposure and the likelihood of sharply higher loss provisions. The complaint contends that Klarna’s registration statement and prospectus mischaracterized the robustness of its credit modeling and risk management, particularly in connection with lending to financially vulnerable or less sophisticated consumers and extending credit for small-ticket, high-interest purchases such as fast-food deliveries. Plaintiffs argue that these practices exposed Klarna to elevated default risk that was not fully reflected in the IPO disclosures, thereby misinforming investors about the company’s near-term earnings volatility and capital needs.

Investor concerns intensified after Klarna reported third-quarter 2025 results on November 18, 2025, which showed a 102% year-over-year increase in provisions for credit losses and a significant year-over-year rise in operating losses. The market reaction was swift, with Klarna’s share price falling to roughly 22% below its IPO level, raising questions about the adequacy of pre-IPO risk disclosure and the sustainability of Klarna’s consumer credit model. Plaintiffs assert that the spike in loss provisions so soon after listing suggests that the underlying credit risks were knowable, and potentially known, at the time of the IPO. The outcome of this litigation could have material implications for Klarna’s legal liabilities, governance practices, disclosure controls, and cost of capital, while also potentially prompting tighter scrutiny of credit underwriting standards and risk reporting across the buy-now-pay-later and consumer lending sector.