Welcome to the Junction! If you received this in your inbox, thanks for signing up and your vote of confidence. If you are reading this as a post on our website, please register here so you can get it directly in the future. Every week I will review the hottest fintech news from the previous week. This will include everything from funding rounds to trends, analysis of a specific space, and a hot look at a specific company or phenomenon. There’s a lot of fintech news out there, and it’s my job to keep up to date – and make sense of it – so you can stay up to date. — Mary Ann
Humiliating time for Klarna
Okay, I had a completely different topic planned for my intro today, and then the news about Klarn came out.
In case you missed it, the Wall Street Journal reported on July 1 that the Swedish behemoth buys now, pays later, and the upstart is the bank. raising $650 million at a $6.5 billion valuation, giving new meaning to the phrase “down the circle”. The news was shocking to say the least. Why do you ask? Well, in June 2021, Klarna was is estimated at $45.6 billion. after completing a $639 million funding round, making it the most expensive private fintech in Europe at the time.
When Klarna confirmed this promotion on June 10, 2021, CEO and founder Sebastian Siemiatkowski sat down with me (via Zoom) in an exclusive interview detailing why he’s so excited about the company’s “explosive growth” in the US and how it planned to use its new capital in part to keep growing there and all over the world. He also said that an IPO is still on the horizon, “but not any time soon.” Then the company had 18 million users in the US.
Fast forward to 2022. As of February, Klarna had 23 million monthly active users in the US and 147 million worldwide. The company reported 32% revenue growth of $1.42 billion in 2021.
By May, Klarna laid off 10% of its workforce, or 700 people.
Romain Dillet of TC reportedThe company did not give any reason for the layoffs. Instead, Siemiatkowski listed various macro and geopolitical factors that led to this decision.
“When we put together our business plans for 2022 last fall, it was a very different world than the one we are in today,” he said. “Since then, we have witnessed a tragic and unnecessary war in Ukraine, changing consumer sentiment, soaring inflation, a highly volatile stock market and a likely recession.”
The company can now cut its valuation by an astonishing 1/7th to $6.5 billion. Notably, Klarna did not confirm this, but, strikingly, the outlook for the company’s proposed latest funding round and new valuation has steadily declined in recent weeks. The Wall Street Journal reported on June 16 that Klarna was considering raising about $15 billion in capital. Even what the new figure represents both a sharp decline from Klarna’s mid-2021 valuation of over $45 billion, and the $30 billion figure it was reported to be targeting earlier this year, as noted by our own Alex Wilhelm . here. So from $45 billion to $30 billion, then from $15 billion to $6.5 billion. It’s hard to imagine things getting worse from here.
However, it’s also important to note that Klarna isn’t the only BNPL supplier to see its price drop. Like another tech enthusiast tweeted on Friday Affirm’s competitor stock also decreases significantly. On July 1 alone, shares fell 5% to $17.13 at the time of this writing at approximately 2:30 pm PT, bringing Affirm’s market capitalization to $4.9 billion. This is up from a 52-week high of $176.65. Ouch.
Speaking of gradesAlex explored like startups after fintech seen their fortunes grow during the venture capital boom of 2021, they are now suffering from a recession of a similar magnitude. The damage, he wrote, is not one-dimensional. On the contrary, the problems in the field of fintech are diverse and multifactorial.
Layoffs in fintech continue. Amount, the company that reached unicorn status last year, recently laid off 18% of its workforce. The exact number affected is unknown, but when TechCrunch announced its latest raise in May 2021, the company said it had 400 employees. If this is still the case, then about 72 people have been fired. Quantity was twisted out of Avant — an online lender that raised over $600 million in capital — in January 2020 to provide enterprise software built specifically for the banking industry. It’s partnering with banks and financial institutions to “quickly digitize its financial infrastructure and compete in retail lending and buy now, pay later,” CEO Adam Hughes told TechCrunch last year.
Federal Trade Commission sues Walmart for sitting on the sidelines while scammers swindled customers out of more than $197 million, the agency said in a statement. it looking for a court order this would force Walmart to refund customers on top of civil penalties. In a brief response, Walmart described the lawsuit as “factually erroneous and legally unsound.” Money order scams are widespread and can include everything from promises to split an inheritance to lie about family crisis. They happen almost everywhere, from Celle, Venmo as well as Cash application to crypto ATMs as well as popular dating apps. In this case, the FTC alleges that Walmart “turned a blind eye to the fraud” that took place in its stores.
Robinhood made headlines three times in the past week.. First, Taylor took a look at what a stock trading and investing app looks like. blinded a surge of interest from the first major “meme stock” after Redditors and other retail investors rallied around $GME and sent its price into the stratosphere. Jacqueline Melnick then responded to rumors that FTX is looking to acquire Robinhood in this piece. And then Alex broke down for us why a crypto exchange might want to buy Robinhood first of all.
According to the International Monetary Fund (IMF), less than 2% of financial institution CEOs are women, and less than 20% of executive board members. Why is it important? Beyond the apparent lack of opportunities for talented women, there are broader implications for business sustainability as well as economic policy at the national and international levels. Read more on Fintech Futures.
Cash App launched Round Ups last week, allowing customers to invest their free money in stocks of their choice or bitcoin every time they use their bank card. Cash App said the product will allow Cash Card users to ” freely accumulate bitcoins and invest in stocks through everyday shopping.
If you haven’t heardA fintech water conference will be held in San Diego, California on August 10th. Fintech Festival 1.0 brings together leaders from Brex, Encore Bank, Mastercard, Checkout.com, Figment, Sift and more for business meetings and discussions on the largest boat on the West Coast. Only this week you can get 40% discount on tickets.
Speaking of discountsbe sure to take advantage of this amazing deal. TechCrunch+ is hosting an Independence Day sale! Save 50% On Annual Subscription Here. Additional Information here. And two-for-one ticket to TechCrunch Disrupt Sale ends July 5th.
Financing and M&A
Seen on TechCrunch
That’s all for this week. I really hope our readers in the US are enjoying the long weekend and Happy Independence Day. And to all of you, have a wonderful week ahead. To borrow from my dear friend and colleague Natasha, you can support me by forwarding this newsletter to a friend or follow me on twitter. Xoxo, Mary Ann
Credit: techcrunch.com /