Klarna confirms $800 million increase as valuation drops 85% to $6.7 billion – TechCrunch
European fintech firm Klarna confirmed it has raised $800 million in a significant drop in valuation.
Rumors have swirled for at least the past month that Sweden-based Klarna, better known as a “buy now, pay later” service provider, has been seeking to raise new money. Initial reports suggested that this valuation would be in the $15 billion range, a sharp drop from its $45.6 billion valuation exactly a year ago. Then earlier this month, leaks suggested the valuation could be closer to $6.5 billion — and that, as things turned out, is pretty much its size.
Klarna confirmed today that it is now valued at $6.7 billion on the back of its new investment, which is an 85% decrease from the corresponding figure reported in June 2021.
The round included a large number of existing and new investors, including Sequoia, Silver Lake, Commonwealth Bank of Australia, UAE sovereign fund Mubadala Investment Company and Canada Pension Plan Investment Board (CPP Investments).
Eager to put a bit of a spin on the ad, Klarna highlights in its press release the “worst stock slump in 50 years,” while also trying to paint a nicer picture by showing what its valuation looks like today versus 2018 — and it makes good use of — fintech companies. circulated publicly for comparison. Perhaps it’s no surprise to know that Klarna looks pretty good with its hand-picked dataset.
The hint here is that while Klarna’s rating may have gone off a cliff when looking at a short-term perspective, it actually wasn’t so bad at the grand scheme of things – the big picture is what really matters, right?
But while many companies have undergone a bit of a “correction” in the wake of the crazy times caused by the pandemic, it’s worth looking at Klarna’s ratings from each year between 2018 and 2022 to get a bit more perspective on things. In 2019, Klarna was valued at $5.5 billion, followed by $10.6 billion in 2020 and $31 billion in March 2021, before hitting massive heights of $45.6 billion just a few months later.
So not only is Klarna down its previous rating, it is still significantly lower in its rating in 2020, and only marginally higher than its rating for 2019. But, compared to 2018, things are great.
After all that has been said, there will likely be Something To spin Klarna. Its valuation is a reflection of what investors believe and don’t necessarily Reflecting what customers think, it is far from the only company that has experienced such a rating crash. Nearly a year and a half after its big initial public offering, Klarna’s rival Affirm has also had turbulent times, with its shares plummeting over the past year — and it’s also now valued at roughly the same value as Klarna, after its market capitalization peaked last year at around 47 Billion dollar.
Sequoia partner Michael Moretz said Klarna’s valuation is “entirely due to investors suddenly voting the opposite way” to the way they previously voted.
“The irony is that Klarna’s business, market position, and popularity with consumers and merchants is stronger than ever since it first invested in Sequoia in 2010,” Moretz said in a press release. “Ultimately, after investors come out of their hiding, shares of Klarna and other top-tier companies will receive the attention they deserve.”