Drop of 85 percent: Klarna loses 39 billion dollars in value

In the last round of financing, the Klarna payment service was valued at $45.6 billion, and investors are extremely confident. Now the Swedes are also feeling the dwindling interest in fintechs - their valuation has plummeted.

The overall rating of the Klarna payment service has fallen by 85 percent within a year. The company from Sweden raised 800 million US dollars (around 794 million euros) from investors in its new round of financing. However, Klarna had to accept a valuation of only 6.7 billion US dollars instead of the 45.6 billion US dollars in the last financing round in June 2021.

The evaluation results from the participation in the company that the financiers receive for their investment. In other words, there are now many more Klarna shares for the same money. Klarna's founder and boss Sebastian Semiatkowski pointed out, among other things, that the stock market is currently experiencing the worst downturn in decades and that the economic situation is challenging. He argued that some listed companies also had to accept discounts of 75 to 90 percent. In view of the changed investor mood, Klarna will again focus more on profitability - but recently a global platform with 150 million users has been built.

Klarna started with the idea of ​​smoother payment processing in online retail and gradually expanded the range to include credit cards and bank accounts, among other things. Last year, investors were still extremely confident about the business prospects and the valuation skyrocketed. In March 2021, Klarna had raised another billion US dollars to an overall valuation of 31 billion US dollars, only three months later another 639 million US dollars were added to the already around 50 percent higher valuation.

With the current slump, Klarna is also feeling the dwindling interest of investors in fast-growing and loss-making fintech companies. The business prospects for financial services are currently being viewed with skepticism in part because consumers are expected to scale back spending given high inflation and a weakening economy.

In order to save costs, Klarna announced in May that the company would cut ten percent of its jobs. Volatile stock markets and the prospect of a likely recession also contributed to the decision. The job cuts affect all parts of the company, Klarna had explained.