Klarna used a prerecorded video message to lay off 10 percent of employees

Photo by Thomas Trutschel/Photothek via Getty Images

According to reports from Protocol and TechCrunch, Klarna is laying off 10 percent of its global workforce in a pre recorded video message. The company currently has 7,000 employees and a 10 percent cutback will affect 700 of them.

Users can purchase a product for nothing or a small fraction of its full price with services like Affirm and Afterpay. Customers will face an interest-free fee for late payments, but they can makeIncremental payments over a set period of time. At the height of the Pandemic, many people were strapped for cash and had nothing else to do but shop online.

The war in Ukraine, a shift in consumer sentiment, a steep increase in inflation, and a likely recession were all cited by the CEO in a pre recorded video message. In Europe, workers will receive associated compensation, but in the US it will look different.

The Wall Street Journal reported last week that Klarna is looking to raise a new round of funding that would value the company at $30 billion, a third less than it was a year ago. Affirm's share price has sunk 75 percent this year.

The unreliability of its customers in a volatile economy is one of the reasons why the services are struggling. According to a recent report from Sfgate, 73 percent of its customers are considered part of Gen Z, and 43 percent of them report missing at least one payment. According to a report from Fox Business, about 30 percent of the customers of BNPL struggle to pay back what they owe, and the current state of inflation doesn't help. It's a risky business to run if you don't get paid back.

Despite the decreased valuation and layoffs, Siemiatkowski told employees that he still believes in Klarnas.