Klarna heads into Thursday's earnings release with a stock down 8% on the week, shorts trimming exposure, and options markets turning unusually bullish — a combination that sets up a genuinely contested print.
The options market is the loudest signal this week. Traders have turned more bullish than at almost any point in the past year: the put/call ratio has collapsed to 0.57, nearly three standard deviations below its 20-day mean of 0.63. That z-score of -2.73 ranks among the most call-skewed readings since the IPO, and the contrast with the 52-week high PCR of 1.33 is stark. Whoever is buying Klarna options into this print is betting decisively on upside, not hedging against a drop.
Short positioning tells a different story — one that is quietly resolving. At 8.5% of free float, short interest is meaningful but has eased roughly 4% on the week and about 1% in the latest session. The month-on-month trend is still up (+5.8%), so the broader short thesis is intact, but marginal sellers are pulling back ahead of results. Borrow costs reinforce the picture: at 0.92%, cost to borrow has more than halved since early July when it was running above 2.5%, a sign that near-term demand for new shorts has cooled. Availability has also opened up, now at 74.6% — substantially looser than the sub-30% readings common through June and early July when the borrow market was genuinely tight. The ORTEX short score of 75 remains elevated, pointing to a structurally bearish positioning backdrop, but the week's direction of travel is short-covering rather than build.
The Street leans bullish, though not uniformly. Goldman Sachs raised its target to $25 in early July, and Deutsche Bank moved to $27 — the highest target in the group. JPMorgan and UBS also lifted targets. The mean analyst target sits at $24.40, implying roughly 28% upside from the current $19.03 close. TD Cowen is the principal dissenter, holding a $19 target and a Hold — essentially calling the stock fairly valued here. Barclays initiated at Equal-Weight with a $20 target, adding a neutral voice to the mix. The bull case centres on a 34% year-over-year surge in merchant count (over 201,000 in Q2) and a US BNPL market projected to reach $116.7 billion this year. Bears point to GMV per merchant under pressure as Klarna adds smaller PSP-driven retailers, and to realised losses that have been sticky near 0.45% of GMV. Earnings momentum factor scores are striking: 90-day EPS momentum ranks in the 99th percentile, with forward EPS growth expectations surging — but the EPS surprise score at just the 15th percentile suggests the company has struggled to actually beat those rising expectations.
The ownership register is worth noting. The top holders — Sequoia at 15.9%, CEO Sebastian Siemiatkowski at 6.5%, co-founder Victor Jacobsson at 5.7% — have not changed their positions recently. BlackRock added roughly 2.7 million shares in the most recently reported period, and Pictet added 3.5 million, both suggesting institutional accumulation at lower prices. Dragoneer trimmed by about 2.5 million shares, the only notable reduction among the visible top holders. With roughly half the float concentrated in long-term pre-IPO holders, the effective tradeable supply is more constrained than headline numbers suggest.
The prior two earnings prints give some context. Klarna dropped 5.8% the day after June 22 results, before recovering 7.4% over the following week. The May print produced a 10.8% one-day jump that extended to 16.4% over five days. Two data points are not a pattern, but they do suggest the stock moves materially on results in either direction. Thursday's session will show whether the call-heavy options setup reflects genuine conviction — or simply an asymmetric trade heading into a binary event.
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