Last week we learned that Klarna, once Europe’s most valuable privately held fintech, raised $800 million. That’s the good news. The bad news? Klarna raised the funds at a $6.7 billion valuation, which is now a tad bit lower than the $45.6 billion the company was worth about this time last year.
Klarna’s founder and CEO Sebastian Siemiatkowski did his best to put a brave face on the situation on Twitter. After acknowledging the valuation drop, he then offered several facts to make the point that Klarna is in good shape despite the valuation haircut. Or perhaps “scalping” is a better term.
Siemiatkowski noted, for example, that Klarna has been profitable from its earliest days. He seemed to be implying that investors shouldn’t treat the company as an unprofitable high-growth unicorn. Fair enough Sebastian, but it looks like Klarna is a victim of forces beyond its control. For now at least. As he says further down in the tweet, “What does not kill you makes you stronger…” Funny how no one ever says that when things are going well.
Adding kindling to the bonfire of doom engulfing the BNPL space was this week’s news that ZipCo., a highly acquisitive Australian buy now pay later platform, is canceling its $355.5 million all-stock purchase of U.S.-based rival Sezzle.
In a statement, Zip said the deal was scuttled by mutual agreement (Okay) “in light of current macroeconomic conditions.”
This can’t be good news for Minneapolis-based Sezzle, which announced a 20% headcount reduction in March. They will, however, earn an $11 million cancellation fee.
The merger cancellation, announced Tuesday, had been a short-term boost for ZipCo. Its share price is up nearly 12% for the week. The same cannot be said for Sezzle. Its share price plummeted by 35% after the merger cancellation was announced.
