Klarna's valuation decreases 85% to $6.7 billion as the 'buy now, pay later' hype fades

July 13, 2022: -On Monday, Klarna saw its valuation slashed by 85% in a new financing round, reflecting grim investor sentiment surroundings high-growth tech stocks and “buy now, pay later” lenders.

The Swedish fintech company said it increased $800 million in fresh funding from investors at a $6.7 billion valuation, down sharply from the $45.6 billion value it secured in a 2021 cash injection led by Japan’s SoftBank.

After weeks of speculation, Klarna sought a known down round, where a privately-valued company increases capital at a valuation lower than when previously sold investors recent shares.

Klarna CEO Sebastian Siemiatkowski had to downplay the significance of the valuation refusal on Monday, which insists the deal was a “testament to the strength of Klarna’s business.”

“During the steepest decreased in global stock markets in over fifty years, investors recognized my strong position and continued progress to revolutionize the retail banking industry,” Siemiatkowski added in a statement on Monday.

And securing backing from existing investors Sequoia and Silver Lake, Klarna attracted additional investment from the Canada Pension Plan Investment Board Abu Dhabi’s Mubadala Investment Company in the round.

Klarna says it would use the funding to pursue expansion in the United States. The company said it has nearly 30 million U.S. users in total.