Klarna to cut 10% of its staff amid “likely recession”

Klarna has announced that it is laying off 10% of its global workforce in a pre-recorded message that was delivered to staff on Monday.

The buy now pay later giant cited a number of factors, including rising prices, a shift in consumer sentiment and the ongoing war in Ukraine.

“We have seen a tragic and unnecessary war in Ukraine unfold, a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market and a likely recession,” Klarna chief executive and co-founder Sebastian Siemiatkowski said in the message.

“All of which have marked the beginning of a very tumultuous year.”

“While crucial to stay calm in stormy weather, it’s also crucial not to turn a blind eye to reality,” he continued.

“What we are seeing now in the world is not temporary or short-lived, and hence we need to act.”

READ MORE: Klarna will now report product use and missed payments to credit reference agencies

Klarna employees in Europe impacted by the redundancies will be offered associated compensation, while the process will differ for those working outside Europe.

The news follows a recent report that the fintech company is seeking to secure funds at about a third less than its current valuation.

Klarna become the highest-valued private fintech in Europe last year via $639m in a funding round, which took its valuation to $45.6bn. The firm is now in talks to secure up to $1bn from new and existing backers in a deal that could value it in the low $30bn range.

All Klarna employees have been asked to work from home this week “in consideration of the privacy of the people affected” by the news.

“This is distressing news for employees of Klarna and their families,” Lendingexpert.co.uk founder David Beard said.

“Those based in the UK should check what redundancy rights they have and dig out any income or mortgage protection policies they hold.

“This news is a sign of the times – consumers aren’t spending in the ways Klarna had hoped, and I wouldn’t be surprised if we see other lenders follow suit. The writing is on the wall for a recession”.

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