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BNPL giant Klarna scrapes $800M funding at dropped valuation of $6.7B from $46B: worst stock downturn in 50 years

Klarna ceo
Image credits: Klarna

Swedish buy now, pay later (BNPL) giant Klarna has just raised $800 million funding. The investment came from existing investors, including Sequoia, Bestseller, Silver Lake, and Commonwealth Bank of Australia. The round also saw participation from new investors, including Mubadala Investment Co. and Canada Pension Plan Investment Board.

Eyes US expansion

The BNPL giant from Stockholm will use the investment to expand in the US, where the market has nearly 30 million customers. The volume has more than tripled in 2020-2021.

“It’s a testament to the strength of Klarna’s business that, during the steepest drop in global stock markets in over fifty years, investors recognized our strong position and continued progress in revolutionizing the retail banking industry. Now more than ever businesses need a strong consumer base, a superior product, and a sustainable business model,” said Chief Executive Officer Sebastian Siemiatkowski said in the statement.

Sequioa partner Michael Moritz stated, “The shift in Klarna’s valuation is entirely due to investors suddenly voting in the opposite manner to the way they voted for the past few years. The irony is that Klarna’s business, its position in various markets and its popularity with consumers and merchants are all stronger than at any time since Sequoia first invested in 2010. Eventually, after investors emerge from their bunkers, the stocks of Klarna and other first-rate companies will receive the attention they deserve”.

Global leader to drop in valuation

In the pandemic, Klarna has launched in 11 new markets, including France, Italy, Spain, Canada and Australia, making it the number one choice for global brands across the world, covering over 20 markets. Globally, it is larger than Amex with 150 million users using Klarna 2 million times a day and app downloads in excess of 60 million.

Since 2018 Klarna has transformed into a global leader and innovator in the payments and retail banking industry, allowing it to create a strong solid foundation in more challenging times.

However, with this round, Klarna reached a post-money valuation of $6.7 billion, which is down from the $45.6 billion it achieved back in June 2021. This is evidence of the worst economic downturn in 50 year. company’s peers have seen a 80-90% drop vs peak valuations and the adjustment in Klarna’s valuation is on par with its public peers.

The company posted an operating loss of 2.54 billion krona (nearly $254 million) in the first quarter while the same for the whole of last year accounted for 6.58 billion krona.

Besides this, Klarna took efforts to layoff staff to curb costs. The new valuation for the company comes at a time when the market is facing pressures due to the potential global recession, higher rates, and inflation.

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