David Trainer puts Klarna's economic book value — what the business is worth assuming no growth at all — at negative $1 a share.
The stock is down about 50% this year, which is exactly what worries him. A halved price invites bargain-hunters into a company he says was a bad business before the fall and is a bad business now.
"So they've got to they got to do some serious growing just to get out of the hole because right now the business as it stands is not worth anything."
Trainer is founder and president of New Constructs, which rates securities from most attractive to most dangerous by combining discounted cash flow analysis with forensic accounting read from the footnotes up, and he put Klarna in the Danger Zone before its 2025 listing.
The full segment is covered here so you can skip it.
Here are the 6 numbers that matter.
👤 Guest: David Trainer, founder and President of New Constructs, which builds discounted cash flow models out of footnote-level forensic accounting and publishes most attractive and most dangerous stock lists
🎙️ Host: Chuck Jaffe, financial journalist and host of Money Life
📰 Published: 14 September 2026 on YouTube (Money Life with Chuck Jaffe)
🔴 YouTube | 🟣 Apple Podcasts | 🔗 Episode page | ⏱️ length not available
Key Takeaways
A 50% fall is the reason he re-flagged the stock, not a reason to buy it
He calls it one of the easier calls of all time
The current price implies gross merchandise value worth 40% of PayPal's and 90% of Amazon's
Even $9 a share — 40% below the price — needs margins to go from zero to 5% immediately
Plus consensus growth to 2027 and then 15% compounded a year through 2035
The no-growth value of the business is negative $1 a share
The chief executive bought about $10 million of stock; the finance and marketing chiefs are leaving
He would not short it, because being right on the fundamentals is not enough without controlling the narrative
1. Back in the Danger Zone
Jaffe's recurring segment with New Constructs looks for companies whose accounting is misleading in a way that works against the investor. This week's name is a repeat offender.
Trainer put Klarna in the Danger Zone about a year ago, just before it listed, and it is back for the opposite reason: the price has fallen.
The specific worry is the bargain-hunting reflex. "Well, we're worried that people think that because it's fallen 50% year-to date that maybe it's an attractive stock that it's a cheap stock and it is not."
His verdict on the underlying business is unqualified: it remains a very poor one, and he called it one of the easier calls of all time.
Even after the fall, in his reading, the price still implies what he called highly unreasonable improvements in fundamentals and cash flows — so the stock has considerably more downside from here.
2. Priced Against Amazon
Jaffe pointed out that the stock has already worked as a short, down 50% this year and more from its peak, and asked how much further a halved stock can go.
Trainer's answer is a comparison rather than a target. Back out the gross merchandise value implied by today's price and it comes to 40% of PayPal's and 90% of where Amazon is today.
His conclusion from that: "You realize that like the just the growth expectations for this company are off thecharts high for a good business and ridiculous for what remains to be a bad business."
The objection is to the category, not only the company. He has never believed in the buy now, pay later model and has made a running joke of how bad a business it is.
3. The Bank Pivot
The company's answer to the model problem is to become a bank, and Trainer took the argument on directly.
The strategy as he described it is to treat buy now, pay later as a cheap way to acquire customer information and generate leads for a banking business.
The balance sheet is what he flags first: more debt than competitors carry, because the company does not securitize the loans it makes and keeps them on its own books.
The timing makes that worse. He sees a tougher economic environment ahead, with payments falling further behind rather than catching up, so those liabilities are held into deteriorating credit.
His view of the destination is no kinder than his view of the origin: banking is not easy, and the competition is very large. On that basis, the 20% compounded annual profit growth for a decade that the price implies seemed ridiculous to him.
Jaffe's contribution was the incumbent argument, and Trainer agreed with it. If there were real money in buy now, pay later at scale, the existing banks — already in the business of lending money and doing well at it — would have jumped in with both feet. That they have not is evidence about the business, not an opportunity.
Jaffe's historical rhyme: "Kmart had the layaway plan it went away so did Kmart by the way."
The retailer's side of the trade is the part he thinks is genuinely good, and it is good for the retailer. For a Walmart, buy now, pay later is effectively securitizing receivables — the retailer gets paid and somebody else takes the risk.
4. The CEO Bought $10M
Jaffe raised a headline that had caught his eye: the chief executive announcing he was buying roughly $10 million of stock, which is normally read as a good sign.
Jaffe framed the credit fairly. Trainer has been consistently critical of executives cashing out while shareholders watch their shares crater, so an insider putting money in at the end of last month is not the worst thing you can see from a recently listed company.
Trainer's answer was to weigh it against who else is leaving. The chief financial officer and chief marketing officer, in post for six and nine years respectively, are both departing early next year.
His conclusion: "So I I'm glad that maybe the CEO's willing to go down with a ship, but it looks like the ship might be going down when you have other major executives leaving."
5. What $9 a Share Requires
Asked for a price he would consider appropriate, Trainer worked the discounted cash flow backwards from a level 40% below the market, which was just under $14 a share as they recorded.
To justify $9 a share, three things have to happen at once: margins move immediately from zero to 5%, revenue grows at consensus estimates through the rest of 2026 and 2027, and then compounds at 15% a year through 2035.
That set of assumptions puts gross merchandise value at $513 billion, against $142 billion today. Even at 40% below the current price, he said, those are really high expectations.
The number Jaffe always asks for is the one with no growth in it at all, and it is negative. "That's negative $1 a share."
"So they've got to they got to do some serious growing just to get out of the hole because right now the business as it stands is not worth anything."
His own summary of where that leaves fair value: he does not feel comfortable saying the stock is worth much above zero. He does not know where the growth comes from, does not know where margin comes from, does not think banking is a route to profits, and considers the core model terrible.
6. Why He Would Not Short It
The last exchange turned from the valuation to whether any of it is actionable, and the answer is a rule about how short selling actually works.
The stock has outperformed as a short since it went into the Danger Zone, and it is not a zombie — it is not running out of money. It is a bad business model.
Trainer's objection to shorting it is timing and narrative rather than analysis. "Shorting is such a timing thing, you know?" You can be right as rain that a stock should go to zero and watch it go the other way for a long time if the popular story runs against you.
His reading of the specialist short sellers is that they have become media platforms as much as research shops, naming Hindenburg Research and Muddy Waters. Controlling or at least affecting the narrative is part of the job, alongside identifying the bad stocks.
The rule he set for himself when he ran a hedge fund with a short book was procedural: no short position he could not publish a lot of research on and go on the media to explain. If he could not do that, he would not put it on.
The playbook he is describing is one he has watched work: "It's a playbook we've seen. David Einhorn and Bill Ackman, that's what they do." They have a short idea, they talk about it publicly, and that is part of the calculus — which a smaller firm cannot replicate.
His advice to an individual investor is the same rule, applied to someone with no platform at all: be really careful unless you can drive the narrative alongside the fundamentals.
Jaffe's close was that the narrative here is ugly enough on its own — do not be fooled by the falling price, and do not count on a dead cat bounce.
Bonus Insights
Jaffe described how a Danger Zone pick lodges in his memory: he cannot recall every one without looking them up, but a headline going past the ticker will stop him and send him back to check. That is how he caught the insider purchase.
Trainer's method, as the segment's standing introduction puts it, is discounted cash flow plus forensic accounting, worked from the footnotes upward, looking specifically for cases where the accounting misleads in the direction that hurts the investor.
Jaffe closed the segment by pointing listeners to the firm's lists of most attractive and most dangerous stocks.
Trainer's bottom line is that the halving has changed the price and nothing else: on his numbers Klarna is worth less than nothing without growth, the price still embeds a decade of compounding, and an insider buying $10 million of stock counts for little next to two long-serving executives heading for the door.
Products, Companies & Tools Mentioned
Klarna (The Danger Zone pick: down about 50% year to date, with a negative no-growth value and, on Trainer's numbers, growth expectations he calls ridiculous for the business)
New Constructs (Trainer's firm, which rates securities from most attractive to most dangerous using discounted cash flow plus forensic accounting)
PayPal and Amazon (His yardsticks: the implied gross merchandise value in the price is 40% of PayPal's and 90% of Amazon's)
Walmart (His example of who buy now, pay later is genuinely good for — the retailer gets paid and the lender takes the risk)
Hindenburg Research and Muddy Waters Research (The specialist short sellers he says have become media platforms as much as research shops)
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