Klarna’s road ahead looks a little harder this year

theguardian.com:

They’re clearly a sensitive bunch at Klarna, the Swedish “buy now, pay later” (BNPL) firm. The privately owned company’s value, as measured by the price at which it raises fresh capital, has just crashed by 85% from $45.6bn (£38.3bn) a year ago to $6.7bn today, but management would like you to think a veritable triumph has occurred.

It was a testament to Klarna’s strength, said chief executive Sebastian Siemiatkowski, that $800m of cash arrived from investors this week “during the steepest drop in global stock markets in over 50 years” – a questionable statistic, incidentally, given what happened in 1973-74, 2001-03 or even 2008.

Michael Moritz, partner at Sequoia, one of the loyal backers, was rolled out to argue that it was perversity, or timidity, on the part of other investors that had caused the plunge in valuation. “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,” he said. Eventually, investors would “emerge from their bunkers” and give Klarna and others “the attention they deserve”.

Well, OK, it’s definitely true that the investment world in general, not just Elon Musk at Twitter, has had a re-rethink about tech valuations. Klarna, which has been lossmaking for the past three years as it pursues rapid expansion in the US, is in the eye of that particular storm. But, come on, it would be equally silly to pretend that life hasn’t changed in a few fundamental ways for BNPL firms.

Apple is about to park its colossal balance sheet on the terrain with the launch of a product for iPhone users in the US in the autumn. Conventional high street banks, too, increasingly want a slice of the action. Meanwhile, consumers are under the