Klarna stock sinks 25% after bad loan costs soar
Financial Times
February 19, 2026
AI-Generated Deep Dive Summary
Klarna's stock price has dropped significantly following a surge in bad loan costs, raising concerns among investors about the company's financial health. The fintech giant saw its shares fall by 25% amid rising defaults on loans provided through its buy-now-pay-later services. This decline comes after an already steep drop of two-thirds since its September IPO, reflecting broader investor skepticism over the sustainability of Klarna's rapid growth and business model.
The sharp increase in bad debt has been attributed to a combination of factors, including high inflation rates across Europe and North America, which have made it harder for consumers to repay their loans. Additionally, Klarna's aggressive expansion into new markets and its reliance on credit lines without strict underwriting practices have contributed to the growing不良 loan portfolio. These challenges highlight the risks associated with the buy-now-pay-later industry, particularly during economic downturns.
The situation at Klarna underscores broader concerns about the sustainability of fintech companies that rely heavily on consumer credit. While these services offer convenience and flexibility for shoppers, they also carry significant financial risks for both businesses and borrowers. Investors are now closely monitoring whether Klarna can adapt its business model to mitigate these risks without compromising its growth trajectory. The outcome could have implications not only for Klarna but also for the wider fintech sector, particularly as regulators scrutinize the industry's practices.
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Originally published on Financial Times on 2/19/2026