The encyclopedia · Finance & Accounting · Financial decision · 2021–2025
Klarna was worth $46B in June 2021 — thirteen months later, $6.7B
SoftBank's $46B valuation made Klarna Europe's most valuable startup. Rising rates and a tech selloff cut it 85%. 700 staff were laid off. Then it IPO'd.
Klarna · 2021-06
What happened
Klarna was a Swedish fintech company founded in 2005 that pioneered the 'buy now, pay later' model. In June 2021, a funding round led by SoftBank Vision Fund 2 valued the company at approximately $46 billion, making it Europe's most valuable private technology company.
Thirteen months later, in July 2022, Klarna raised $800 million at a $6.7 billion valuation — an 85% decline. The company attributed the drop to falling technology valuations and rising interest rates. In May 2022, Klarna announced it would lay off about 10% of its 7,000 employees — roughly 700 staff — citing deteriorating business sentiment from inflation and the war in Ukraine.
The workforce continued to shrink: from 5,527 in 2022 to 2,907 by 2025. Klarna said the reduction was due to natural attrition and AI automation, including an AI assistant that by February 2024 handled about two-thirds of customer-service chats — the equivalent of 700 full-time agents.
On 10 September 2025, Klarna went public on the NYSE under the ticker KLAR at $40 per share. Revenue for the 2025 financial year was $3.5 billion, with adjusted operating profit of $65 million. The company that had been worth $46 billion in private markets went public at a fraction of that figure — but this time, the numbers were real.
Why it happened
- A $46 billion private valuation in a zero-interest-rate environment reflected the cost of capital, not the earnings of the business; when rates rose, the multiple compressed
- The buy-now-pay-later model depends on consumer credit risk; rising rates and inflation increased default risk and reduced the margin on every transaction
- SoftBank's involvement at the peak signalled that the valuation was driven by capital availability rather than fundamentals — the same dynamic that inflated WeWork
- The 85% valuation decline in thirteen months was not a failure of the business but a correction of the narrative; Klarna's revenue grew throughout the period
The lesson
A private valuation at zero rates prices capital availability, not earnings. When rates rise, the multiple compresses. The company may be fine; the valuation was the fiction.
Sources
- Wikipedia — Klarna
- SEC EDGAR — Klarna Group plc F-1 registration statement
- BBC News — Klarna to cut 10% of staff as it warns of recession, 24 May 2022
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