Klarna Group (KLAR) received a downgrade from UBS Securities due to the magnitude of its H2 gross merchandise volume guidance reduction and uncertainty related to the planned departures of two of its C-level executives, according to a Friday note from the brokerage.

Klarna lowered its fiscal 2026 gross merchandise volume guidance primarily due to softening trends in Germany, according to the note.

The company operates in an "attractive global end market" and has a number of unique strengths, such as new distribution deals, growing card programs, and an early-stage US Fair Financing business, UBS said.

However, Klarna lowered its H2 gross merchandise volume guidance by about $3.4 billion, excluding foreign exchange effects, at the top end of the range, which would represent roughly $6 billion annualized, the analysts noted. They said this implies a significant reduction in international growth expectations, particularly in Germany.

The investment firm also noted that there's uncertainty around the company amid planned transitions for its chief financial officer and chief marketing officer.

UBS downgraded the company's stock rating to neutral from buy and cut its price target to $16 from $23.

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