Europe’s Most Valuable Startup Was Worth $46 Billion Last Year; It’s Down 85%

A year after earning a $ 46 billion prize, Swedish payment firm Klarna announced on Monday that it had raised $ 800 million at a valuation of $ 6.7 billion. This is a dramatic drop of 85% for the groundbreaking buy now, pay later (BNPL) firm.

CEO Sebastian Siemiatkowski said Klarna retains a “strong position.” Others may say it experiences the end result of sky high valuation now, finishing later.

Valuation, meet inflation

BNPL loans grew rapidly during the pandemic as more people shopped from home, but companies specializing in the service were hammered amid broader stock market sales. Klarna, for example, was quick to point out that competitors are also 80 to 90% lower from peak valuation. For example, publicly traded Affirm has lost more than 80% of its value this year.

There is also a lot of pressure. A bunch of BNPL players showed up, from German Billie and Mondu to Sweden’s Treyd to the UK’s Hokodo and Playter. Apple and Block, which bought the BNPL firm Afterpay, also entered the arena. However, Klarna’s bottom line could use a tweak a little closer now as later:

  • Klarna’s losses rose to $ 748 million last year, compared to $ 150 million in 2020, when the company endorsed aggressive expansion. In May, the company fired 10% of staff and blamed inflation and the war in Ukraine for weakening economic sentiment.
  • Siemiatkowski said Klarna plans to “return to profitability” after taking losses to expand (the company had 147 million active consumers in 2021, 70% more year-on-year). “During the sharpest decline in global stock markets in more than fifty years, investors have recognized our strong position and sustained progress in the retail banking industry revolution,” he added, in a statement.

The New World: “An entire generation of entrepreneurs and technology investors built their entire prospects on valuation during the second half of an incredible 13-year bull market run,” said Bill Gurley, a general partner at venture capital firm Benchmark and one of Silicon Valley’s most respected transaction makers. tweeted earlier this year. “Previous ‘all time’ highs are completely irrelevant. It’s not ‘cheap’ because it’s 70% lower. Forget those prices happened.”

Did the check clear? According to Bloomberg, participants in a $ 800 million round of funding by Indian online education provider Byju, including Sumeru Ventures, have been reluctant to transfer $ 250 million for “macroeconomic reasons.” Maybe they can offer them a BNPL option.

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