Last week offered a mixed bag of results for Klarna, the popular BNPL giant. Things have taken another drastic turn, as the company will lay off 10% of its workforce. Moreover, the ongoing valuation crunch for the company may require even further rough decisions to attract fresh capital.
Klarna Has A Long Way To Go
It is always unfortunate to see a company achieve significant growth and then face a severe setback. That situation is new to Klarna, although the broader finance industry has seen this song and dance before. Company employees were informed of an impending 10% workforce reduction through a pre-recorded video message by Klarna chief Sebastian Siemiatkowski.
While the company still has very big ambitions for 2022, these goals may remain out of reach. Like all other companies across various industries, Kalrna faces external events affecting its business. Moreover, the team can do nothing about these things except make unpopular decisions. Laying off 10% of employees is never a fun ordeal, but it is necessary for the company.
Siemiatkowski stated in the message that:
“More than ever, we need to show laser focus on what really makes us successful in the future. Based on this, the senior leadership at Klarna has made some tough decisions. Some of the toughest we’ve ever had to take. Together, we have re-evaluated the organization to ensure that we can continue to deliver on our ambitious goals.”
Klarna is currently in the process of raising extra capital, although not at its $46 billion valuation. Instead, the company wants to raise money at a 30% discount, putting its valuation closer to $33 billion. It remains unclear who will pay the money, as existing backers may rethink their approach. Finding new investors is not easy either, certainly not for a $1 billion round.