It has been an intriguing week for the Klarna team, although not everything goes according to plan. The company has surpassed 150 million active customers for its buy now, pay later service, which is very exciting. Unfortunately, the company will need to raise more capital at a steep discount to its valuation.
Klarna Experiences A Rollercoaster
It is interesting to see how quickly things can go from one side of the spectrum to the next in the fintech sector. Klarna, the popular BNPL giant, has hit 150 million monthly active users. Moreover, the team is hosting Dream Deal Days, a three-day event with exclusive deals and product drops. All of this is made possible through strong ties between the giant and the world’s biggest retail brands.
Consumers can benefit from various discounts on purchases found on wishlists worldwide. That includes the millions saved on Klarna’s in-app wishlists. Accessing these deals is possible through the Klarna website, mobile app, and participating merchants. The company has come a long way since its inception 17 years ago, and there may be more growth ahead.
Unfortunately, there is some bad news to consider. The tech stock market has been hit thoroughly by volatile market conditions, as have other financial markets. That volatility has spilled over into fintech stocks, forcing Klarna to conduct a new fundraising round at a 30% discount to its $46 billion valuation. New and existing backers can contribute up to $1 billion, although it would bring Klarna’s valuation to the low $30 billion range. Not an ideal situation, but not one that can be avoided either.
Contributing to this need for fresh capital is Klarna’s $748 million operating loss in 2021. Expanding to new markets and underwriting a strong inflow of new customers is always a risky endeavor. However, growing the losses by 400% year-over-year is not a trend to continue over the coming years. It will be interesting to see how existing and potential backers respond to this opportunity.