Klarna’s Value Reportedly Slashed by Two-Thirds

Klarna will be looking into raising more funds at a significantly lower value than it got last year, which shows how dire the environment is right now for tech funds, The Wall Street Journal (WSJ) writes.

The company’s new talks could result in a deal valuing the company at around $15 billion, reportedly a decline below what was reported last month, when it was seeking to raise $1 billion at a $30 billion valuation.  According to a statement emailed to PYMNTS from a Klarna spokesperson, the figures floated in media outlets are no more than rumors and speculation.

The current talks might end up with $500 million – with no guarantee of a deal going forward.

WSJ wrote that the economic conditions have seen tech shares suffering, with the companies, previously flourishing despite being unprofitable, seeing investors putting profits over growth. The news of a possible recession has sent the markets spiraling.

The recent economic troubles have seen Klarna with a net loss quadrupling in the first quarter to 2.57 billion Swedish krona, which comes out to $250 million.

The company, as a result, has said it plans to lay off 10% of its workforce, due to the “volatile” economy and need to cut costs, it said.

This all comes as the BNPL industry is getting more scrutiny. There was a glut of popularity as younger buyers added to the economy of installment payments. But these days there has been a shift in things, with ticket prices growing beyond $1,000 and the news of various price increases becoming more prominent.

Fellow BNPL player Affirm has reportedly clocked over 12.7 million customers in the first three months of the year.

But regulators are taking more of a look at the space, with a House Subcommittee on Financial Services hearing convened on the issue last November because of the rising amounts of consumer debt.

According to Splitit CEO Nandan Sheth, there could be changes to BNPL lending as there’s tighter underwriting standards limiting their ways to extend loans as a result of more regulations.

Read more: Affirm’s Plummet Could Portend Trouble for BNPL Space