Klarna stock: here’s why this Affirm rival is pumping today

Klarna stock price is pumping today, May 14, after the Buy Now Pay Later (BNPL) company published its financial results. KLAR jumped by over 15% to $15, reaching its highest point since March 16 this year. It has now soared by nearly 30% from its all-time low. 

Klarna stock jumps after releasing strong numbers

Klarna, a top Affirm rival, published strong financial results, as demand for credit jumped amid the US-Iran war. Its results revealed that active customers jumped by 21% YoY to 119 million, while merchants surged by 50% to 1.07 million. 

A combination of more merchants and customers led to a strong increase in its Gross Merchandise Volume (GMV), which rose by 33% to $33 billion. US GMV jumped to $7.1 billion, while its international segment jumped by 79% to $26.6 billion

Also, the revenue soared by over 44%, making it the fastest-growing player in the BNPL industry. Affirm’s revenue rose by 33% YoY, while Sezzle jumped by 22%.

Klarna stock also jumped after the results showed that it made a $1 million profit, up by $100 million in the same period last year. The management believes that the profitability trend will continue being positive in the coming years. 

Klarna also boosted its forward guidance. It now expects its annual GMV will jump to $155 billion this year, with the revenue being 2.8% of that. Its second-quarter GMV is expected to be between $35.5 billion and $36.5 billion. As a result, the revenue will be between $960 million and $1 billion. In a statement, the CEO said:

“The funding model is deposit-led. 90% sits in consumer deposits, the vast majority long-term fixed deposits in Europe that support our global balance sheet. That diversification is a durable structural cost advantage.”

Most importantly, Klarna’s delinquency rate has continued moving downwards even as the economy remains under pressure amid the Iran war. The management attributed this improvement to its strong underwriting models, which improve as it gains more customer data.

READ MORE: Affirm stock forms a bullish setup as BoFA hints at a surge ahead

Looking forward, analysts are optimistic that the company’s stock will continue rising in the coming months. BMO Capital Markets has a target of $16, while Bank of America has a target of $21.

The most bullish analyst is Jason Kupferberg, who expects the stock to more than double and hit the resistance at $32.  Morgan Stanley has a target price of $23, much higher than where it is today.

KLAR stock price technical analysis 

Klarna stock price chart | Source: TradingView 

The daily chart shows that the Klarna share price peaked at $56.5 after going public last year and then crashed to a record low of $12, a level it has failed to move below several times this year.

It formed a double-bottom pattern, which often leads to a strong bullish breakout over time. There are signs that the recent consolidation was part of the accumulation phase of the Wyckoff Theory.

Therefore, there is a likelihood that the stock has bottomed, which will likely lead to more gains in the coming weeks. If this happens, the next key level to watch will be the 23.6% Fibonacci retracement level at $22.6. Such a move would mean a 46% surge from the current level.