Klarna helps investors to buy now, cry later
LONDON, July 11 (Reuters Breakingviews) - Klarna is putting a positive spin on its shareholders’ misery. The private buy-now-pay-later group on Monday confirmed it has raised $800 million in new funding, valuing it at $6.7 billion. That’s an 85% decline for investors who valued the Swedish company at $45.6 billion in June last year, including Japan’s SoftBank Group (9984.T).
Klarna can blame the flighty market, which is now penalising cash-guzzling technology stocks. The latest valuation is equivalent to just under 5 times 2022 sales, if first-quarter revenue of $352 million is annualised. That’s in line with the average of listed players Affirm (AFRM.O) and Zip , according to Refinitiv data. Michael Moritz, partner of long-standing investor Sequoia, bemoaned investors “suddenly voting in the opposite manner to the way they voted for the past few years”.
But Chief Executive Sebastian Siemiatkowski struck an optimistic tone. He argues Klarna shareholders are still up some 219% from 2018’s valuation, beating rivals like PayPal (PYPL.O) and Jack Dorsey’s Block (SQ.N). Still, the outlook is much less certain than in 2018, with a global recession looming and competition from groups like Apple (AAPL.O) heating up. Klarna’s losses hit 2.6 billion Swedish crowns ($242 million) in the first three months of 2022, compared to a gain of 97 million crowns ($9 million) at the same period in 2017. Despite Siemiatkowski’s spin, the sharp valuation decline points to deeper problems for Klarna and its peers. (By Karen Kwok)
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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
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