Klarna Faces Securities Class Action Over IPO Disclosures and Surging Credit Losses

New updates have been reported about Klarna.

Klarna Group plc is at the center of a pending U.S. securities class action that alleges its September 2025 IPO filings misrepresented the quality of its credit portfolio and risk controls, with investors facing a February 20, 2026 deadline to seek lead plaintiff status. The lawsuit contends Klarna’s registration materials highlighted strong credit modeling and scoring capabilities while failing to adequately disclose that the company was extending credit aggressively to financially unsophisticated consumers, including for higher-risk purchases such as fast-food delivery, a lending profile that may have undermined portfolio quality and future loss expectations. Just weeks after the IPO, Klarna reported a 102% year-over-year increase in provisions for credit losses, a sharp deterioration that triggered a significant post-listing share price decline from its $40 IPO level and raised questions over whether investors received a complete picture of Klarna’s risk exposure at the time of listing.

For Klarna, the litigation introduces legal, financial, and reputational risk at a critical stage as a newly public company whose business model relies heavily on credit underwriting discipline and investor confidence in its loss forecasting. The core allegation is that the company’s disclosures around its loan book quality and the sustainability of its growth may not have matched the underlying risk profile implied by its lending practices, particularly in short-term, small-ticket, higher-risk segments. While no liability finding has been made, a negative outcome could result in financial settlements, tighter scrutiny of Klarna’s disclosure and risk management framework, and potential pressure to adjust underwriting standards or growth strategies. Executives and stakeholders should closely monitor case developments, potential regulatory interest, and any forthcoming refinements to Klarna’s credit risk, disclosure, or consumer-lending practices that may emerge as the company responds to investor claims and market concerns.