Klarna Continues to Struggle After Major Drop in Valuation

It wasn’t that long ago when Swedish buy now, pay later (BNPL) giant Klarna was on top of the world. In June of 2021, the company was valued at a staggering $45.6 billion, and following a $639 million fundraise, it had become the largest fintech in the European market.

In 2022, Klarna’s outlook isn’t quite so rosy. After shedding 10% of its workforce in May, it has taken another major blow in the form of a massive downgrade in its value, most recently being valuated at $6.5 billion, less than 15% of its high water mark.

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According to the company’s Founder and Chief Executive Officer, Sebastian Siemiatkowski, Klarna’s recent fortunes are due to a number of factors beyond leadership’s control. “When we set our business plans for 2022 in the autumn of last year, it was a very different world than the one we are in today. Since then, we have seen a tragic and unnecessary war in Ukraine unfold, a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market, and a likely recession.”

In keeping with its reputation as a disruptor, Klarna is not giving up despite this setback. Indeed, the company has plans to rebuild, starting with another $600 million round of fundraising that it plans to complete with investors Sequoia Capital and Mubadala.