Klarna value slashed by 85%

The fintech company had enjoyed enormous growth, whilst being criticised by some parties for unregulated practice and for performing insufficient checks on consumers, leading people unwittingly into unsustainable debt.

Its latest round of fundraising saw its value slashed by 85%, to less than £7bn (£5.9bn).

In 2021 it had hit a peak valuation of $46bn (£38.7bn) after a $639m (£538m) funding round led by Japan’s SoftBank.

Klarna was able to justify its performance due to “high inflation, rising interest rates, mounting fears of a recession, the after effects of the first global pandemic since 1918, strains on commerce caused by supply chain disruptions, rising gas prices, and, especially in Europe, the dislocations caused by the war in Ukraine”.

Michael Moritz, chair of Klarna, said: “The shift in Klarna’s valuation is entirely due to investors suddenly voting in the opposite manner to the way they voted for the past few years.

“Eventually, after investors emerge from their bunkers, the stocks of Klarna and other first-rate companies will receive the attention they deserve.”

In May 2022 Klarna cut 10% of its 7,000-plus workforce.

The future of BNPL remains unclear, as the government has announced plans to regulate the practice due to high levels of debt it can bring – but without detail so far.