KLAR heads into its May 14 earnings report under growing short pressure — yet with options markets surprisingly calm.
Short sellers have grown more committed over the past month. Short interest has climbed to 7.9% of free float, up roughly 5.6% over 30 days. Days to cover — at 6.1 by the most recent official reading — place it firmly in the slow-to-unwind category. Lending availability has tightened as well, with the borrow market running well below its year-ago squeeze levels but sitting at 86% utilization. The one signal pointing the other way is cost to borrow, which has eased sharply from above 10% in late March to just 2.5% now — roughly three-quarters of the peak CTB has drained away, suggesting the recent short build is orderly rather than frantic. Price action reinforces the cautious tone: KLAR has fallen 0.8% in a day and 3.3% in the past week, even after recovering 10% over the past month.
Options markets tell a more relaxed story than the short positioning would suggest. The put/call ratio is running at 0.70 — slightly below its 20-day average of 0.74, and a fraction of the 1.33 level it reached in late March. The z-score sits at -0.37, which is barely directional. That's a notable contrast: short interest has been building steadily since mid-April, but options buyers are not layering on downside protection in any obvious way heading into the print. The PCR's 52-week low is 0.29, so there is runway lower still if sentiment flips bullish post-results.
The analyst community is broadly sceptical but not bearish. Two new initiations — TD Cowen and BMO Capital, both within the past three weeks — landed at identical $16 targets with Hold and Market Perform ratings respectively. That puts fresh Street coverage directly in line with the current price of $14.39, implying only modest upside. The consensus mean target is $22.44, but that figure is skewed by pre-February targets that were cut dramatically after the last earnings miss. JP Morgan slashed its target from $40 to $20 in February; UBS went from $46 to $20. The stock's EPS surprise factor score ranks in the 95th percentile — Klarna has historically beaten estimates — but the 90-day EPS momentum score sits at just the 4th percentile, flagging downward estimate drift into this print. Bulls point to net charge-off improvement and the US BNPL market growing at 12% CAGR toward $116.7bn in payment value. Bears focus on GMV per merchant declining as newer PSP partnerships skew the mix toward smaller retailers, and a consistent realized loss rate of 0.45% of GMV.
The ownership picture adds texture. Sequoia holds 16% of shares outstanding. CEO Sebastian Siemiatkowski holds 6.5%. Victor Jacobsson, a co-founder, added 846,000 shares in the most recent reported period. Wellington Management lifted its position by 368,000 shares in February. Those are stabilising signals against a short base that has added roughly 4.7 million shares since mid-April. Peers have mostly moved in the same direction: AFRM is down 5% on the day and 5.2% on the week, TOST is down a sharper 14.7% in a single session. The sector headwinds are real.
The May 14 print is therefore a direct test of whether Klarna's credit quality and GMV trajectory can justify any premium to a $16 floor — at a moment when the Street's newest analysts have already answered that question with a Hold.
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