Tracking Klarna’s plummeting valuation – TechCrunch
Welcome to The Exchange! If you received it in your inbox, thank you for subscribing and for your vote of confidence. If you read this as a post on our site, subscribe here so that you can receive it directly in the future. Each week, I’ll take a look at the hottest fintech news from the previous week. This will include everything from funding rounds and trends to analysis of a particular space and hot shots on a particular company or phenomenon. There’s a lot of fintech news out there and it’s my job to stay in the loop – and make sense – so you can stay in the know. — Mary Ann
A period of humility for Klarna
Welp, I had a whole other topic planned for my intro today and then the Klarna press shot.
In case you missed it, on July 1, The Wall Street Journal reported that the Swedish bank buy now, pay later and the upstart bank would raise $650 million at a $6.5 billion valuation, giving a new meaning to the expression “down”. The news was shocking to say the least. Why do you ask? Well, in June 2021, Klarna was valued at $45.6 billion after closing a $639 million funding round, making it the highest valued private fintech in Europe at the time.
When Klarna confirmed this increase on June 10, 2021, CEO and Founder Sebastian Siemiatkowski sat down with me (via Zoom) in an exclusive interview, explaining why he was so excited about the company’s “explosive growth” in the States. United States and how she planned to use her newfound capital in part to continue growing there and around the world. He also said an IPO was still in sight “but not anytime soon”. The company then had 18 million users in the United States
Fast forward to 2022. In February, Klarna had 23 million monthly active users in the United States and 147 million worldwide. It recorded a 32% increase in revenue of $1.42 billion for 2021.
In May, Klarna laid off 10% of its workforce, or 700 people.
As TC’s Romain Dillet reported, the company did not name a single reason for the layoffs. Instead, Siemiatkowski listed different macro and geopolitical factors that led to the decision.
“When we made our business plans for 2022 in the fall of last year, it was a very different world than the one we find ourselves in today,” he said. “Since then, we have seen a tragic and unnecessary war unfold in Ukraine, changing consumer sentiment, a sharp rise in inflation, a highly volatile stock market and a likely recession.”
Now the company could cut its valuation by an incredible 1/7 to $6.5 billion. Notably, Klarna hasn’t confirmed this, but, surprisingly, the projection of the company’s alleged latest funding round and new valuation has steadily declined in recent weeks. The Wall Street Journal reported on June 16 that Klarna is considering raising capital at a valuation of around $15 billion. Same this The new figure was 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, as reported. noted our own Alex Wilhelm here. So $45 billion to $30 billion to $15 billion to $6.5 billion. It’s hard to imagine it going down any further from here.
It is also important to note, however, that Klarna is not the only BNPL supplier to have seen its valuation drop. As another tech enthusiast tweeted Friday, competitor Affirm’s Stock is also down significantly. On July 1 alone, shares were down 5% at $17.13 as I write this around 2:30 p.m. CT, giving Affirm a market capitalization of $4.9 billion. This is down from the 52-week high of $176.65. Ouch.
Speaking of reviews, Alex examined how after fintech startups saw their fortunes rise during the venture capital boom of 2021, they are now suffering a meltdown of a similar magnitude. The damage, he writes, is not one-dimensional. Instead, the pain around the fintech sphere is varied and multifactorial.
Fintech layoffs continue. Amount, a company that achieved unicorn status last year, recently laid off 18% of its workforce. The exact number of people affected isn’t known, but when TechCrunch reported on its last increase in May 2021, the company said it had 400 employees. If this is still the case, around 72 people have been made redundant. Rising was taken from Before – an online lender that raised over $600 million in equity – in January 2020 to deliver enterprise software specifically designed for the banking industry. It partners with banks and financial institutions to “rapidly digitize their financial infrastructure and compete in consumer lending and buy now, pay later sectors,” CEO Adam Hughes told TechCrunch last year.
Federal Trade Commission sues Walmart for sitting while scammers defrauded clients of more than $197 million, the agency alleged in a statement. He’s asking for a court order that would force Walmart to return money to customers, in addition to civil fines. In a brief response, Walmart described the lawsuit as both “factually flawed and legally baseless.” Money transfer scams are widespread and can involve everything from promises to share an inheritance to lies about a family emergency. They happen everywhere, from Zelle, Venmo and cash app at crypto ATMs and popular dating apps. In this case, the FTC alleges that Walmart “turned a blind eye to the fraud” that took place in its stores.
Robinhood has made headlines three times in the past week. First, Taylor looked at how the stock trading and investing app was blindsided by the surge in interest in the first big “stock meme” after Redditors and others Retail investors rallied around $GME and sent its price into the stratosphere. Jacqueline Melnik then addressed the rumors that FTX is looking to acquire Robinhood in this piece. And then Alex told us why a crypto exchange might want to buy Robinhood in the first place.
According to the International Monetary Fund (IMF), less than 2% of financial institution CEOs are women, and for board members, that figure is less than 20%. Why is this important? Besides the obvious lack of opportunities for talented women, there are broader implications for business resilience as well as for economic policy at national and international levels. Lily more about Fintech Futures.
Cash App launched Round Ups last week, allowing customers to invest their spare change in a stock of their choice or in bitcoins each time they use their Cash Card. Cash App said the product would allow Cash Card users “to seamlessly accumulate bitcoin and stock investments through everyday purchases.
If you haven’t heard yetthere is a fintech conference on the water in San Diego, California on August 10th. Fintech Festival 1.0 connects executives from Brex, Encore Bank, Mastercard, Checkout.com, Figment, Sift and more for business meetings and discussions on the West Coast’s largest boat. You can get 40% off ticket prices this week only.
Speaking of discounts, be sure to take advantage of this incredible offer. TechCrunch+ is hosting an Independence Day sale! Save 50% on an annual subscription here. More information here. And the two-for-one ticket for the TechCrunch Disrupt sale will expire on July 5.
Financing and M&A
Seen on TechCrunch
Drive now, pay later: Startups are making electric vehicles more accessible by postponing the biggest bill
A look at how Conversion Capital plans to support early-stage fintech startups from its new 6x bigger fund
HomeLister wants to make selling your home a DIY and cheaper affair
Brazilian motorcycle rental startup Mottu is accelerating with $40 million to help more Latin Americans become couriers
Here’s Carta’s response to the business becoming more global
Sava, an expense management platform for African businesses, secures $2m pre-seed support
It’s all for this week. To our readers in the United States, I really hope you are enjoying the long weekend and Happy Independence Day. And to everything from you, have a wonderful week ahead. To borrow from my dear friend and colleague Natasha, you can support me by forwarding this newsletter to a friend or follow me on twitter. Xoxo, Mary Ann