Klarna will cut 10% of its workforce by buying now, paying later

Klarna plans to cut about 10% of its global workforce by making the purchase now, and will later pay the company its latest big tech name to announce job cuts.

Sebastian Semyatkowski, CEO and co-founder of Klarna, made the announcement in front of his staff in a pre-recorded video message on Monday. “The vast majority of Klarna employees will not be affected by the measures,” he said, “but some will be informed that we cannot offer you a role in the new organization.”

“If you work in Europe, you will be offered to leave Klarna with related compensation,” said the Klarna boss. “Outside Europe, the process for affected employees will look different depending on where you work.”

Klarna will share more information with its staff about the changes “very soon”, Semyatkovski said. The Swedish payment giant currently has more than 6,500 employees.

Buy now, pay later Companies like Klarna’s, which allow buyers to spread the cost of buying a series of interest-free installments, have become extremely popular as online shopping accelerated during the Covid pandemic. But investors are beginning to worry about the sustainability of the sector’s growth as consumers tighten their strings amid rising inflation and rising borrowing costs. Affirm, the largest provider of BNPL in the United States, has lost nearly three-quarters of its value in the stock market since the beginning of the year.

The notice of dismissal comes after that media Reports last week said Klarna would lose a third of its market value in a new round of financing. The private company was last valued at $ 46 billion in an investment led by SoftBank. A Klarna spokesman said the company was not commenting on market speculation.

Semyatkovsky said Klarna’s decision to cut staff was “difficult”, but the company needed to remain “laser-focused on what would really make us successful in the future”.

“While it is crucial to stay calm in stormy weather, it is also crucial that we do not close our eyes to reality,” he said. “What we see now in the world is not temporary or short-lived, and we must therefore act.”

Many technology companies that thrived during the Covid pandemic are now taking steps to cut costs as investors worsen in the sector due to concerns about rising interest rates and declining market liquidity. Meta and Uber, a parent of Facebook, are among the companies delaying hiring, while Netflix and Robinhood have announced job cuts.