Down, down in a later round

Buy-now-pay-later firm Klarna announced a new round of funding yesterday valuing it at $6.7 billion – just a teeny tiny downgrade from the $45.6 billion valuation the Swedish startup commanded in June 2021.

😬 Driving the drop… According to market analysts, Klarna’s ‘downround’ – aka when a private firm raises money at a lower valuation than previous funding rounds – is a reflection of ongoing market turmoil, particularly among tech stocks, and indicates that the rest of the BNPL industry is also in trouble (and not just because Apple is entering the market).

• If that is the case, someone should probably tell Klarna CEO Sebastian Siemiatkowski. He referred to the round in part as “a testament to the strength of Klarna's business.”

📈📉 The big picture: Overall, the BNPL industry has been growing at a fast clip. Global transaction volumes reached $120 billion in 2021, up from $33 billion in 2019… but this year has hit industry players hard.

• Affirm, which debuted on public markets in early 2021, has seen its stock fall more than 77%.
• Likewise, shares of PayPal and Square-parent Block – which recently acquired Australian buy-now-pay-later firm Afterpay – are down 64% and 61%, respectively.

+In the know: Nearly 75% of BNPL users in the US are Gen-Z or millennials.