Once Europe’s most valuable private tech company, Klarna saw its value cut by 85% after a strenuous $800m funding round
Source: depositphotos.com
According to The Guardian, Klarna’s latest fundraising round has given the company its lowest valuation since August 2019. Then it was worth $5.5bn. A steep fall of the BNPL leader’s value comes amidst “possibly the worst set of circumstances to afflict stock markets since World War II”.
The Buy Now Pay Later businesses are going through hard times, criticised for potentially leading shoppers into unsustainable debt. Pressured by the rising living costs, customers also shy away from splurging. Klarna has already shed 10% of its more than 7,000 staff, preparing for the worst.
As if that wasn’t enough, big tech Silicon Valley rivals such as Apple create competition in the market with products like Apple Pay Later. Moreover, investors know that high Fed rates might influence BNPL’s access to institutional funding. Therefore, they choose more stable stocks.
Nevertheless, the latest fundraising attracted new investors such as Mubadala, the sovereign wealth fund of the United Arab Emirates, and the Canada pension plan investment board. Besides, Klarna claims its popularity continues to surge. With more than 150 million customers globally, it is now bigger than American Express.
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