The fact that a high flight is often unfortunately followed by a deep fall has recently been experienced by some once successful companies. For example, the streaming giant Netflix now has to rely on a low-cost subscription model to generate new users. With Klarna, it has now hit probably the most successful fintech company. However, the Swedish payment service seems to be doing much worse than previously thought. There is now talk of a fall of 85 percent in the company’s valuation.
For a year in free fall
Actually, business has been incredibly good for Klarna in recent years. In April 2022, the company was even able to proudly announce that it would henceforth be working with Ebay Kleinanzeigen. But numbers, unfortunately, do not lie. And so it now frightens Sebastian Semiatkowski, CEO of Klarna, in particular, when he looks at the figures for his company. While the Swedish payment service was still valued at a company value of $45.6 billion in June 2021, one year later it is said to be worth just $6.7 billion. It’s really rare to see such a landslide.
Of course, the question now arises as to the reasons for the miserable valuation. And Semiatkowski seems to have the right answer. He sees the current stock market in particular as a cause for Klarna’s descent. Due to the disastrous economic situation, which brings with it consequences such as inflation and an increase in the prime rate, stock trading is also getting into a mess. Many people want to get their sheep in the dry and sell whole blocks of shares without further ado. The result is that many companies have to accept bitter losses – including Klarna.
An ingenious idea becomes a global success
The success story of Klarna is almost unparalleled. Similar to PayPal, the Swedish company also wanted to provide one thing above all – more simplicity when paying online. The model was well received by millions of customers and thus the company grew rapidly. After the successful establishment of its payment system, the company quickly launched its own credit card and bank account, as is typical for fintech. Since everything seemed to be going well, the company’s valuation increased exponentially year after year. Even in 2021, financiers were quite optimistic that things would continue to look up for the company.
But then came the aftermath of the Corona pandemic, followed by the Ukraine war in February of this year. Two drastic events that brought not only human suffering but also severe economic consequences. With many people now unable to think about online shopping and saving for fear of the financial future, payment services like Klarna are not doing well at the moment. So the abysmal rating comes as no surprise. We are curious to see whether the company will be able to rescue itself from its economic difficulties.