Putting Klarna's valuation reset in context

Klarna, once the most highly-valued BNPL player on the market, is close to raising a new round of funding that would value it at $6.5 billion, per the Wall Street Journal. That's a far cry from its $45.6 billion valuation roughly a year ago.

Why it matters: Klarna received a "pandemic boost" as shoppers turned to online retail therapy. Now investors are valuing it as if it received little to no lasting benefit from that experience at all.

By the numbers: At $6.5 billion, the valuation would be its lowest since mid-2019, when investors decided the startup was worth $5.5 billion. That 2019 round netted the company $460 million, while the WSJ reports the company is seeking about $650 million this round.

• Klarna's valuation surged amid the pandemic, to $10.7 billion (Sept. 2020), to $31 billion (March 2021), to $45.6 billion (June 2021).

The bottom line: Klarna's 86% price drop would be in line with the pains felt by its public competitors, such as Affirm (also down more than 80% in the last year) — a sign that slower private markets are beginning to catch up with the public one.

Klarna declined to comment.