STOCKHOLM — Buy now, pay later company Klarna lowered its outlook this week after discovering that consumers eventually progress beyond the “buy now” phase of the economic cycle.
The company, which allows shoppers to divide purchases into smaller installments, cited weaker retail conditions in parts of Europe even as its U.S. business continued growing.
Analysts said the development highlights a little-discussed feature of installment lending known as the fourth payment.
“For years, the model focused heavily on what consumers wanted now,” said one retail analyst. “We are beginning to receive more data about what happens later.”
Klarna has helped millions of shoppers transform one unaffordable purchase into four surprisingly affordable reminders of the same unaffordable purchase.
The system works particularly well when wages are rising, consumers feel confident, and nobody opens their banking app.
Investors sent Klarna shares lower following the reduced forecast, effectively choosing to recognize the disappointment immediately rather than spreading it across four interest-free installments.
The company remains optimistic about long-term growth.
Any concerns can be revisited in two weeks.
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