Klarna’s potential valuation cut to $15 billion looks high enough – TechCrunch
Journal recently reported that Klarna, a European buy-it-pay-later (BNPL) provider, is planning to raise capital at a valuation of around $15 billion. The new figure is both a dramatic drop from Klarna’s valuation of more than $45 billion in mid-2021 and the $30 billion figure it was aiming for earlier this year.
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Klarna is not alone in losing value in recent quarters. Since its fundraising in June 2021, the value of fintech companies has fallen sharply. And, the European point-of-sale lender also saw value in its best-known public player, US BNPL player Affirm.
But given what’s happening in the BNPL sector, Klarna’s predicament comes as no surprise – aside from the general decline in the value of tech companies, consumer electronics and computing giant Apple recently announced that it would launch a BNPL product, which also hurt Affirm’s stock.
The impact of the revision of the prices of BNPL companies goes beyond assertion and Klarna. A host of BNPL-focused startups that raised capital during the venture capital peak of 2021 are also digesting a radically different fundraising and valuation landscape. Klarna is simply the biggest, best-known and most valuable private company captured in the mix.
Given that we have its Q1 earnings from last month, we can query its possible new valuation in comparative terms with Affirm to see how the companies compare. When it was reported that Klarna was targeting a $30 billion valuation for its new funding round, this column dug its results in comparison to Affirm. Let’s run the calculation again, this time using new Klarna data and a drastically changed price.
Klarna Q1 2022
When Klarna reported its first quarter results, headlines focused on it cutting 10% of its staff. The company said that while it was “still seeing strong growth across the business”, it was “time to consolidate and build on the strong foundation [it had] established.”
Looking at the company’s numbers, it’s not hard to see why Klarna decided it needed to cut spending. Observe: