Tracking Klarna’s falling valuation – TechCrunch
Welcome to The Interchange! If you received this in your inbox, thank you for registering and your declaration of trust. If you are reading this as a post on our site, sign up here so you can receive it directly in the future. Every week I want to take a look at the hottest fintech news from last week. This will include everything from funding rounds to trends to an analysis of a particular place to hot take on a particular company or phenomenon. There’s a lot of fintech news out there, and it’s my job to keep me on top – and understand it – so you can stay up to date. – Mary Ann
A humble time for Klarna
Well, I had a completely different topic planned for my intro today, and then came the Klarna news.
In case you missed it, the Wall Street Journal reported on July 1 that the Swedish buy now, pay later behemoth and upstart bank reportedly raises $ 650 million to a valuation of $ 6.5 billion, which gives new meaning to the term «down round». The news was shocking to say the least. Why do you ask? Well, in June 2021, Klarna was valued at $ 45.6 billion after completing a $ 639 million round of financing – 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, describing why he was so excited about the company’s “explosive growth” in the US and how it planned to use their new capital in part to continue to grow there and globally. He also said that a stock exchange listing was still in sight “but not anytime soon.” The company then had 18 million users in the United States
Fast forward to 2022. As of February, Klarna had 23 million monthly active users in the US and 147 million globally. It reported 32% higher revenue of $ 1.42 billion for 2021.
In May, Klarna had laid off 10% of the workforce, or 700 people.
As TC’s Romain Dillet reported, the company did not mention a single reason for the dismissals. Instead, Siemiatkowski listed various macro- and geopolitical factors that led to the decision.
“When we set our business plans for 2022 last fall, it was a completely different world than the one we are in today,” he said. “Since then, we have seen a tragic and unnecessary war in Ukraine unfold, a shift in consumer sentiment, a sharp rise in inflation, a highly volatile stock market and a likely recession.”
Now the company can cut its value by an astonishing 1/7 to $ 6.5 billion. In particular, Klarna has not confirmed this, but surprisingly enough, the estimates for the company’s alleged last round of financing and new valuation have fallen steadily in recent weeks. The Wall Street Journal reported on June 16 that Klarna was considering raising capital worth around $ 15 billion. Even that The new figure represented both a dramatic decline from Klarna’s valuation from mid-2021 of more than $ 45 billion and the figure of $ 30 billion that was reported to be aimed at earlier this year, as our own Alex Wilhelm noted here. So from $ 45 billion to $ 30 billion to $ 15 billion to $ 6.5 billion. It’s hard to imagine going even further down here.
It is also important to note that Klarna is not the only BNPL supplier that has seen a decline in valuation. Like another technology enthusiast twitret On Friday, the competitor Affirm’s share is also down significantly. On July 1 alone, the stock was down 5% to $ 17.13 at the time I wrote this around 2.30pm CT, giving Affirm a market value of $ 4.9 billion. It is down from a 52-week high of $ 176.65. Au.
Photo credit: Twitter
Weekly news
Speaking of valuations, Alex examined how after the start-up of financial technology saw their wealth rise during the venture capital boom in 2021, they are now suffering from a decline of a similar magnitude. The damage, he wrote, is not one-dimensional. Instead, pain around the fintech sphere is varied and multifactorial.
The redundancies in fintech continue. Amount, a company that achieved unicorn status last year, recently laid off 18% of the workforce. The exact number of people affected is not known, but when TechCrunch reported its latest increase in May 2021, the company said it had 400 employees. If that is still the case, around 72 people were released. The amount was spun out of Avant – an online lender that has raised over $ 600 million in equity – in January 2020 to offer enterprise software built specifically for the banking industry. It is partnering with banks and financial institutions to “quickly digitize their financial infrastructure and compete in retail lending and buy now, pay later,” CEO Adam Hughes told TechCrunch last year.
Federal Trade Commission sues Walmart for sitting while fraudsters took customers out of more than $ 197 million, the agency claimed in a statement. It is seeking a court order that will force Walmart to give money back to customers, in addition to civil fines. In a brief response, Walmart described the lawsuit as both “actually wrong and legally unfounded.” Money transfer scams are widespread, and they can involve everything from promises to share an inheritance to lies about a family crisis. They happen just about everywhere, from Zelle, Venmo and the Cash App to cryptocurrencies and popular dating apps. In this case, the FTC claims that Walmart “closed its eyes to fraud” that went down in their stores.
Robinhood made headlines three times in the last week. Taylor first looked at how the stock trading and investment app was dazzled by the rise in interest from the first major “meme stock” after Redditors and other retail investors gathered around $ GME and sent the price into the stratosphere. Jacqueline Melnik then took up the rumors that FTX is looking to buy Robinhood in this play. And then Alex broke down for 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 the financial institutions’ managing directors are women, and for executive board members the figure is less than 20%. Why does this matter? Apart from the obvious lack of opportunities for talented women, there are broader implications for business resilience as well as economic policy at the national and international levels. Read more at Fintech Futures.
Cash App launched Round Ups last week, so that customers can invest their extra money in a stock of their choice or bitcoin every time they use the prepaid card. The Cash App said the product would allow Cash Card users to “seamlessly collect bitcoin and stock investments through daily purchases.”
If you have not heard yet, there’s a fintech conference on water coming to San Diego, California, on August 10th. Fintech Fest 1.0 builds bridges between executives from Brex, Encore Bank, Mastercard, Checkout.com, Figment, Sift and many others for business meetings and discussions on the largest boat on the West Coast. You can get a 40% discount only this week.
Speaking of discounts, be sure to take advantage of this wonderful deal. TechCrunch + has an Independence Day sale! Save 50% on an annual subscription here. More information here. And the two-for-one ticket to the TechCrunch Disrupt sale expires on July 5th.
Financing and M&A
Watch TechCrunch
Drive now, pay later: Startups make electric cars more accessible by postponing the biggest bill
A look at how Conversion Capital plans to support early fintech startups out of their new 6x larger fund
HomeLister wants to make selling your home more of a do-it-yourself affair, and cheaper
Brazilian motorcycle rental startup Mottu raises $ 40 million to help more Latin Americans become couriers
Here is Carta’s response to the commitment to becoming more global
Sava, a cost management platform for African businesses, receives $ 2 million in advance
And elsewhere
GoCardless goes after Plaid with Nordigen’s purchase
Knox Financial expands loan products with $ 50 million in financing
Zilch draws $ 50 million more to avoid problems in the BNPL industry
That was it for this week. For our readers in the United States, I really hope you enjoy the long weekend and happy Independence Day. And to everyone of 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
