Investors used to love Sebastian Siemiatkowski’s disruptive zeal. The Swedish entrepreneur’s “buy now, pay later” (BNPL) firm Klarna received a $46 billion price tag on a June funding round last year . That now requires a rethink.
The BNPL sector is struggling. Afterpay, acquired by Block for $32 billion, saw bad debts balloon to $177 million in the six months to December, from $72.1 million a year ago. True, entering new markets partly explains why. But fashion retailers such as Asos
, which partially rely on BNPL to increase sales, have also seen increasingly cash-strapped punters buying less. Meanwhile, in 2021, Klarna made an operating loss that was triple the one recorded in 2020.is looking to raise another $1 billion, has some defences. In Germany and Sweden, Klarna is also a bank that holds consumer deposits.
Even so, Klarna’s eyebrow-raising valuation is in peril. Affirm and fellow BNPL player Zip trade on an average of 8.2 times last year’s sales. At that level, Klarna would be worth a mere $11 billion. Siemiatkowski could argue that his firm should be valued on a multiple of the gross merchandise value it enables. Nearly 60% of the $80 billion of GMV Klarna processed last year was BNPL. Affirm and Zip trade on over 70% of GMV, implying a Klarna value of $36 billion. The rest of its business is the so-called “Pay Now” payments processing business, and European rivals Adyen
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