The valuation represents a massive discount from last June's $639 million funding round, when the firm was riding the buy now, pay later wave. However, like its industry peers, Klarna has been buffeted by negative investor perceptions of a sector that is in the cross-hairs of an economic downturn.

The Swedish firm has reported soaring operating losses of $748 million for the full year 2021 and outlined plans to lay off 10% of staff as it faces up to a faltering economy and rising interest rates.

Despite these challenges, Klarna received continued backing from its existing investors including Sequoia, the founders, Bestseller, Silver Lake, and Commonwealth Bank of Australia. More notably, several entities known for their long-term commitments made their first investments in Klarna. These include Mubadala Investment Company, the $284bn sovereign fund of the UAE, and Canada Pension Plan Investment Board (CPP Investments) which manages over C$539bn.

Sebastian Siemiatkowski, CEO of Klarna states: “It’s a testament to the strength of Klarna’s business that, during the steepest drop in global stock markets in over fifty years, investors recognised our strong position and continued progress in revolutionizing the retail banking industry. Now more than ever businesses need a strong consumer base, a superior product, and a sustainable business model.”

Klarna has used investor largesse over the past three years to push into new international markets - racking up 30 million users in the hard-to-crack US market - and build out its product suite. Globally, the firm currently claims 150 million users in over 20 markets with 440K merchant partnerships.

Michael Moritz, partner at Sequoia says the shift in Klarna’s valuation is entirely due to investors suddenly voting in the opposite manner to the way they voted for the past few years.

"The irony is that Klarna’s business, its position in various markets and its popularity with consumers and merchants are all stronger than at any time since Sequoia first invested in 201," he says. "Eventually, after investors emerge from their bunkers, the stocks of Klarna and other first-rate companies will receive the attention they deserve”.