The tech world is in crisis. Klarna, the biggest fintech in Europe, lost 85% of its valuation in just a few months. While its valuation reached 45.6 billion dollars exactly one year ago, it is now only 6.7 billion dollars. This despite a recent fundraising of 800 million dollars.
Klarna loses 85% of its market valuation
In 2020, Klaran became the first European fintech to exceed $10 billion in valuation. In a short time, the company had managed to make a name for itself in the world of online payment thanks to his promise “buy now, pay later”. Fintech acts as an intermediary, allowing the consumer to buy goods without having to pay directly. Klarna pays the merchant first, and sends an invoice to the individual, who settles it in interest-free installments.
For a few weeks, a rumor has been circulating about a new fundraiser at Klarna. The company’s valuation has collapsed. Klarna has confirmed that it was now valued at $6.7 billion with his new investment. This represents an 85% decline from the June 2021 valuation. Eager to put a twist “positive” at the announcement of this new fund raising, Klarna emphasizes in its press release the “worst stock drop in 50 years”while trying to paint a less bleak picture by showing how its current valuation stacks up against 2018.
The aftermath of the pandemic
Many businesses are experiencing some sort of ” correction “ after a period of madness due to the pandemic. If we look at Klarna’s valuation history, here’s what it looks like: the company was valued at $5.5 billion in 2019, then at $10.6 billion in 2020, at $31 billion in March 2021, before hitting a dizzying high of $45.6 billion in June 2021. Klarna’s valuation is a reflection of what its investors thinkand doesn’t necessarily reflect what customers think, and it’s far from the only company experiencing this.
Affirm, Klarna’s main competitor, experienced exactly the same thing a few months ago. Michael Moritz, partner at Sequoia, believes that “The irony of history is that Klarna’s business, its position in various markets and its popularity with consumers and merchants are all stronger than at any time since Sequoia first invested in 2010 ». Finally, this therefore does not change the activity and the growth of the company. Klarna can continue to dream of being a super-app for shopping.