Breaking: Buy Now Pay Later Giant Loses $99 Million From Chronically Broke Users…

Klarna’s latest earnings are a masterclass in fintech delusion: a company bleeding cash while using an AI avatar to tell investors everything is fine. It’s not. Klarna just reported a $99 million net loss in Q1… more than double what it lost during the same period last year. Why? Because surprise, people financing burritos and bulk-pack socks from Walmart aren’t exactly default-proof.

(Source: Giphy) 

In short, consumer credit losses hit $136 million, up 17% year-over-year. That’s a lot of people ghosting on their $11 impulse buys. Klarna’s entire model… giving short-term, interest-free loans to people who don’t have the cash upfront… works great when the economy isn’t actively crumbling. But when U.S. consumer confidence is circling the drain and inflation expectations are being whipped around by a Trump-administered trade war, you start seeing exactly what happens when your customer base runs out of money and starts treating "Pay in 4" like Monopoly cash.

The company’s credit loss rate also ticked up to 0.54% of total payment volume, from 0.51% a year ago. Not a massive jump, but when your entire business hinges on velocity and volume, every tenth of a percent is a dagger to the kidneys. Klarna’s U.S. expansion, which now includes deals with Walmart, DoorDash, and eBay, is looking less like a growth play and more like a brutal faceplant. 

(Source: Financial Times) 

On the other hand, they’ve been trying to slap lipstick on this mess by talking about how 83% of loans refresh within three months… as if short-term exposure to unpaid debt is somehow less toxic. It’s not. It’s just faster. Translation: if the entire customer base is shifting from “occasionally strapped” to “chronically broke,” there’s not a lot of pivoting you can do except stop lending to them altogether. Which is no bueno to Klarna’s lifeblood. 

To their credit though, they are trying to claw back some control. Revenue rose 13% YoY to $701 million, and they’re bragging about having 99 million active customers. Which is great… but the problem is, most of those users are probably also active in dodging debt collectors. So good luck getting them to pay you back. They’ve also slashed headcount by 39% over two years and cut customer service costs by 12% this quarter, probably thanks to their AI hallucination CEO who presented the earnings. Which if you haven’t caught, actually happened. They rolled out a synthetic CEO to announce quarterly losses LOL. 

(Source: Fast Company) 

Going forward, the company says it’s “closely monitoring changes in the macroeconomic environment” and “remains well-positioned to adapt swiftly.” Translation: “We’re getting smoked, but we’re hoping the Fed or a miracle does something before we die.” And honestly, that’s all investors hear right now. 

So yeah, that’s where we are at. Klarna built a business on the assumption that people would buy dumb sh*t and pay it off later. Now we're finding out what happens when "later" comes due when consumer sentiment is dead and nobody brought their wallets. Fun times. Now obviously, Klarna isn’t publicly tradable… yet, but still, it’s worth looking into especially if your portfolio contains a competitor like Affirm… a stock currently down -1.59% (and down -21% YTD). 

(Source: Giphy) 

Meaning, keep your eyes on this sector and place your bets accordingly, friends. Until next time… 

P.S. Oh, I’m sorry, I didn’t know you liked getting rekt. Let’s face it, retail investors get the short end of the stick all day everyday. It’s the smart money’s world, and we are just living in it–only useful when it comes to liquidity purposes in the market. Meaning, if you’re as pissed off as I was when I found out Milli Vanilli was lip syncing the whole time, then it’s time to go from investing blind, to investing smart. Luckily for you, the key is right here as a Stocks.News premium member. Click here to see exactly how our premium members are printing while others quake in the face of today’s market chaos. 

Stocks.News does not hold positions in companies mentioned in the article.