Pay Now, Buy Later
Klarna to lay off 10 percent of its workforce as consumers shun layaway
Consumers just aren’t spending like they used to, laments CEO and co-founder Sebastian Siemiatkowski.
Klarna plans to lay off about 10 percent of its total workforce. Sebastian Siemiatkowski, CEO and co-founder of the buy now, pay later service, made the announcement to his employees in a message on Monday. The “vast majority” of Klarna employees won’t be affected by the measures, he wrote, although some “will be informed that [Klarna] cannot offer [them] a role in the new organization.”
The layoff announcement comes after The Wall Street Journal reported Klarna is set to lose a third of its market value in a new round of funding. The privately held company was last valued at $46 billion in an investment led by SoftBank and currently has more than 6,500 employees.
The Klarna-pink slip — In his announcement, Siemiatkowski blames the round of layoffs on “a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market, and a likely recession.” Keeping these factors in mind, he says, Klarna has re-evaluated its organizational setup to make sure it has “the right people in the right place.” The company will share more information with workers about its employment changes soon, Siemiatkowski said.
Employees working in Europe will be offered to leave Klarna with an associated compensation, while the layoff process for those based outside of Europe will look different depending on where workers are located.
Consumers are clutching their purses — Buy now, pay later companies like Klarna have become more popular throughout the pandemic. Their services, which allow shoppers to spread the cost of purchases over a series of interest-free installments, soften the blow of bigger purchases but have also been tied to growing consumer debt. Especially for younger shoppers — namely Gen Z — buy now, pay later services have done more damage than good, enabling bad spending habits and lowering credit scores.
Amid this news and, more notably, rising inflation, consumers have lessened their use of buy now, pay later services: Affirm, the biggest BNPL provider in the U.S., has lost nearly three-quarters of its stock market value since the start of 2022. While Klarna hasn’t commented on its own value — or alleged lack thereof — it’s likely that changing consumer behavior will continue to affect the company and its employees.
