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Klarna's CEO used a pre-recorded video message to tell employees around 700 of them were being laid off

·3-min read
Klarna
Klarna's valuation has slumped by about one-third since mid-2021.Shutterstock
  • Klarna, a "buy now, pay later" fintech, said Monday it will lay off 10% of its employees.

  • CEO Sebastian Siemiatkowski used a pre-recorded video message to break the news to staff.

  • Several prominent tech firms, including Robinhood and Netflix, have recently announced layoffs.

The CEO of Klarna used a pre-recorded video message to inform employees that around 700 of them were being laid off.

Sebastian Siemiatkowski cited "a tragic and unnecessary war in Ukraine, a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market and a likely recession" as factors in the decision.

Klarna joins a rapidly-growing list of tech companies announcing hiring freezes and job cuts as fears of a recession mount. Investing app Robinhood cut 9% of its full-time staff in April and B2B startup Mainstreet eliminated one-third of its staff in early May.

Siemiatkowski said Klarna, a Swedish fintech backed by Softbank, would lay off 10% of its employees, including staff in the US as well as Europe. This amounts to around 700 employees in total, according to Klarna's LinkedIn bio, which states that the company has more than 7,000 staff members.

Siemiatkowski told staff Monday that laid off employees would receive a calendar invite in the coming days titled "Meeting regarding your role at Klarna." All Klarna employees were told to work from home this week to honor the privacy of affected staff members.

Siemiatkowski said: "The senior leaders of Klarna have made some really tough decisions. Some of the hardest ones we have ever had to make."

Klarna recently approached investors about raising funds at a $30 billion valuation, marking a 34% slump from its mid-2021 valuation of $45.6 billion, according to a Bloomberg report.

The Swedish "buy now, pay later" fintech was flying high through most of 2021. In June of last year, it announced a $639 million fundraise led by Softbank's Vision 2 Fund, which secured Klarna's rank as the highest-value private fintech in Europe. Klarna had been planning a public offering for later this year.

The economic climate for tech companies has been rapidly turning sour and buy now, pay later firms have also been coming under more scrutiny.

In December, the US Consumer Financial Protection Bureau announced it was opening an inquiry into buy now, pay later schemes including Klarna, to investigate their impacts on consumer debt and compliance with consumer protection laws.

Not only tech startups are affected: Netflix laid off around 150 employees last week and Facebook announced a broad hiring freeze across almost the entire company. Twitter paused hiring and rescinded some job offers in May, Bloomberg reported. And one of Klarna's own heavyweight funders, Softbank, just declared an annual loss of $13.2 billion and said it would be pulling back on new investments.

Klarna didn't immediately respond to Insider's request for comment.

Read the original article on Business Insider

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