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Klarna’s dramatic drop in value and what it means for BNPL

Klarna valuation
Image credit: Ascannio / Shutterstock.com

In 2021, Swedish fintech company Klarna became Europe’s most valuable private startup with a staggering valuation of $45.6bn.

Now, just one year later, the firm is in talks for a new equity round that would see its valuation drop to as low as $6bn (£5bn).

It has been known for several months that the fintech giant was looking to raise at a reduced valuation. But the scale of the drop has caught many in the high-growth industry by surprise.

In May, it was reported that Klarna’s valuation had dropped to around $30bn. Last Friday, that became less than $10bn, before settling at around $6bn by the end of the day.

For those keeping track, the Klarna valuation has followed a similar trajectory to WeWork – the co-working space company that presented itself as a tech unicorn – which hit a $47bn valuation at its peak before plummeting to today’s market capitalisation of $3.75bn....