The Wall Street Journal recently reported that Klarna, a European buy-now-pay-later (BNPL), is considering raising capital at a valuation of about $15 billion. The new figure is both a dramatic drop from Klarna’s mid-2021 valuation of more than $45 billion, and the $30 billion it reportedly targeted earlier this year.
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Klarna is not alone in losing value in recent quarters. Since the fundraising in June 2021, the value of fintech companies has fallen sharply. And the European consumer retail lender has also seen a decline in the value of its best-known public comp, US BNPL player, Affirm.
But given what’s going on in the BNPL sector, Klarna’s predicament comes as no surprise — in addition to the general decline in the value of tech companies, consumer electronics and computing giant Apple recently said it would launch a BNPL product, which will also boost Affirm’s shares. caused damage.
The impact of the price review of BNPL companies goes beyond just Affirm and Klarna. A large number of BNPL-focused startups that raised capital during the venture capital boom of 2021 are also processing a dramatically different fundraising and valuation landscape. Klarna is simply the biggest, best known and most valuable private company in the mix.
Since we have last month’s Q1 results, we can interrogate the potential new valuation compared to Affirm to see how the companies are doing. When it was reported that Klarna had pursued a $30 billion valuation for its new round of funding, this column delved into its results against Affirm’s. Let’s run the calculation again, this time with new Klarna data and a drastically changed price.
Klarna’s Q1 2022
When Klarna reported its first quarter results, the headlines focused on it cutting 10% of its workforce. The company said that while it was “still experiencing strong growth across the business”, it was “time to consolidate and take advantage of the strong fundamentals [it had] established.”
Looking at the company’s numbers, it’s not hard to understand why Klarna decided to cut costs. NB: