Sebastian Siemiatkowski, CEO of Klarna, speaking at a fintech event in London on Monday, April 4, 2022.
Chris Ratcliffe | Bloomberg via Getty Images
LONDON — After 20 years in the role as Klarna’s CEO, Sebastian Siemiatkowski is about to face his toughest test yet as the financial technology firm prepares for its blockbuster debut in New York.
Siemiatkowski, 43, co-founded Klarna in 2005 with fellow Swedish entrepreneurs Niklas Adalberth and Victor Jacobsson with the aim of taking on traditional banks and credit card firms with a more user-friendly online payments experience.
Today, Klarna is synonymous with “buy now, pay later” — a method of payment that allows people to buy things and either defer payment until the end of the month or pay off their purchases over a series of equal, interest-free monthly installments.
But while Siemiatkowski has grown Klarna into a fintech powerhouse, his entrepreneurial journey hasn’t been without its challenges — from facing rising competition from rivals such as PayPal, Affirm and Block‘s Afterpay, to an 85% valuation plunge.
Nevertheless, Siemiatkowski hasn’t taken those challenges lying down and the outspoken co-founder isn’t shy to challenge criticisms in the run up to an IPO that could value it at $15 billion.
‘Crazy enough’
In October 2024, CNBC met with Siamiatkowski during a visit the Swedish entrepreneur made to London. For a businessman who’s faced a rollercoaster ride of ups and downs over his two-year CEO tenure, Klarna’s chief has a calm air to him.
“Independently of all the cycles and everything we’ve gone through with the company, at any point in time I ask myself, do I still think that Klarna can become the next Google in size, that we can become a hundreds of billions dollar market company, or a trillion dollars,” Siemiatkowski told CNBC. “I still am crazy enough to think that’s achievable.”
But the firm has attempted to rebuild that eroded value in the years that have followed.
Klarna makes money predominantly from fees it charges merchants for providing its payment services, in addition to income from interest-bearing financing plans and advertising revenue.
Financials disclosed in its IPO filing show that Klarna reported revenue of $2.8 billion last year, up 24% year-over-year, and a net profit of $21 million — up from a net loss of $244 million in 2023.
Bullish on AI
After the launch of OpenAI’s generative AI ChatGPT in November 2022, Siemiatkowski quickly pivoted Klarna’s focus to embracing the technology, and especially in a way that could slash costs and enhance the firm’s profitability.
However, Siemiatkowski’s strategy and his comments on AI have also attracted controversy.
Klarna’s CEO then said in August that his company was able to reduce its overall workforce to 3,800 from 5,000 thanks in part to its application of AI in areas such as marketing and customer service.
“By simply not hiring … the company is kind of becoming smaller and smaller,” he told Reuters news agency, adding that jobs were disappearing due to attrition rather than layoffs.
Asked by CNBC about his views on AI and the upset they have caused, Siemiatkowski suggested he was “done apologizing,” echoing comments from Mark Zuckerberg about the Meta CEO’s “20-year mistake” of taking responsibility for issues for which he believed his company wasn’t to blame.
Doubling down, Siemiatkowski added that AI “already today can do a lot of the jobs that people do — but I don’t want to be one of the tech leaders that stands on a stage and says, ‘Don’t worry about it, there’s going to be new jobs,’ because I don’t know what those new jobs are.”
“I just want to be transparent and honest with what I think is happening, and I’d rather be open about that, because I know what these people, the tech leaders are saying when they’re not on public stages, and they’re not saying the exact same things,” he told CNBC in October.
An outspoken CEO
Siemiatkowski is no stranger to defending his company in response to criticisms, especially when challenged over Klarna’s business model of offering short-term financing for all kinds of things from clothing to online takeout.
One X user posted a meme showing personal finance pundit Dave Ramsey with the caption, “what do you mean you have $11k in ‘doordash debt’.”
Siemiatkowski took to X to defend the move, saying that Klarna “offers many payment methods” including the ability to pay in full instantly or defer payment until the end of the month in addition to monthly installments.
“DoorDash offers many products beyond food!” Klarna’s boss said on X in response to the criticisms. “I know we are most famous for pay in 4. But you can use a credit card at DoorDash as well.”
As Klarna approaches its stock market debut, investors will likely be scrutinizing his track record and whether he’s still the right person to lead the company longer term.
Lena Hackelöer, CEO of Stockholm-based fintech startup Brite Payments, is someone who’s worked under Siemiatkowski’s leadership, having worked for the company for seven years between 2010 and 2017 in various marketing functions.
She expressed admiration for the Klarna co-founder — and pushed back on suggestions that leadership mismanaged the business during the pandemic era.
“I never thought that they had mismanaged, which is somehow how it was reported,” Hackelöer told CNBC in a November interview. “I think that they were just very much focusing on growth — because that was the direction that investors were giving.”
Rollercoaster ride
Siemiatkowski admits the journey of building Klarna hasn’t always been rosy.
Asked about the biggest challenge he’s ever faced as CEO, Siemiatkowski said that, for him, laying off 10% of Klarna’s workforce in 2022 was the toughest thing he’s ever had to do.
“That was very difficult because I didn’t predict that investor sentiment would shift that fast and people would go from valuing companies like ours so high and then to something so low,” he said.
“That’s obviously very difficult because, then you realize like, ‘OK, s—, I’m going to have to make a change. It’s not going to be sustainable to continue, and I need to protect the consumers, who are stakeholders in the company, the employees, the investors — I need to [do] what’s right for all of my constituents,” Siemiatkowski continued.
Klarna is synonymous with the “buy now, pay later” trend of making a purchase and deferring payment until the end of the month or paying over interest-free monthly installments.
Nikolas Kokovlis | Nurphoto | Getty Images
“But unfortunately, it’s going to affect the smaller group, which happened to be about 10% of our employees.”
Like other tech firms, Klarna grew significantly over the Covid-19 pandemic. In 2020, the firm grew its gross merchandise volume or the total value of all sales processed through its platform, by 46% year-over-year, to $53 billion.
I think anyone who is a little bit sane, that’s not something you take light hearted, right? It’s a tough decision. It makes you cry. I’ve cried.
Sebastian Siemiatkowski
CEO, Klarna
The company also onboarded hundreds of new employees to capitalize and expand on the opportunity it saw from government lockdowns’ impact on consumer behavior and the broader acceleration of e-commerce adoption at that time.
“I think anyone who is a little bit sane, that’s not something you take lighthearted, right?” Klarna’s CEO said, referring to the layoffs. “It’s a tough decision. It makes you cry. I’ve cried.”
However, Siemiatkowski stood by his decision to lay off workers: “I felt like I had an obligation to my constituents, everyone, all of these stakeholders, the company, and I think it was a necessary decision at that point in time.”
The road to IPO
Now, Klarna’s CEO faces his biggest test yet — taking the business he co-founded two decades ago public.
“IPOs are risky for companies as share prices can fluctuate quickly,” Nalin Patel, director of EMEA private capital research at PitchBook, told CNBC via email. “They can be costly and lengthy to arrange with investment banks too.”
If it succeeds, the outcome could catapult the net worth of Siemiatkowski and other shareholders including Sequoia Capital, Silver Lake, Mubadala Investment Company, and the Canada Pension Plan Investment Board.
Sequoia is Klarna’s single-largest shareholder with a 22% stake. Siemiatkowski is the second-largest, owning 7% of the business.
A positive IPO outcome would also lift the value of Klarna employees’ stakes, and potentially boost morale after a turbulent few years for the company.
“It’s a balance between finding a fair value for existing investors looking to cash out and new investors seeking a stake in Klarna at a fair price. Overvaluing the company could lead to its valuation falling in the future. While undervaluing it may mean money has been left on the table for those exiting,” Patel said.
President Donald Trump speaks before signing executive orders in the Oval Office on March 6, 2025.
Alex Wong | Getty Images
President Donald Trump says that tariffs will make the U.S. “rich.” But those riches will likely be far less than the White House expects, economists said.
The ultimate sum could have big ramifications for the U.S. economy, the nation’s debt and legislative negotiations over a tax-cut package, economists said.
White House trade adviser Peter Navarro on Sunday estimated tariffs would raise about $600 billion a year and $6 trillion over a decade. Auto tariffs would add another $100 billion a year, he said on “Fox News Sunday.”
Navarro made the projection as the U.S. plans to announce more tariffs against U.S. trading partners on Wednesday.
Economists expect the Trump administration’s tariff policy would generate a much lower amount of revenue than Navarro claims. Some project the total revenue would be less than half.
Roughly $600 billion to $700 billion a year “is not even in the realm of possibility,” said Mark Zandi, chief economist at Moody’s. “If you get to $100 billion to $200 billion, you’ll be pretty lucky.”
The White House declined to respond to a request for comment from CNBC about tariff revenue.
The ‘mental math’ behind tariff revenue
There are big question marks over the scope of the tariffs, including details like amount, duration, and products and countries affected — all of which have a significant bearing on the revenue total.
The White House is considering a 20% tariff on most imports, The Washington Post reported on Tuesday. President Trump floated this idea on the campaign trail. The Trump administration may ultimately opt for a different policy, like country-by-country tariffs based on each nation’s respective trade and non-trade barriers.
But a 20% tariff rate seems to align with Navarro’s revenue projections, economists said.
The U.S. imported about $3.3 trillion of goods in 2024. Applying a 20% tariff rate to all these imports would yield about $660 billion of annual revenue.
“That is almost certainly the mental math Peter Navarro is doing — and that mental math skips some crucial steps,” said Ernie Tedeschi, director of economics at the Yale Budget Lab and former chief economist at the White House Council of Economic Advisers during the Biden administration.
Trade advisor to U.S. President Donald Trump Peter Navarro speaks to press outside of the White House on March 12, 2025 in Washington, DC.
Kayla Bartkowski | Getty Images
That’s because an accurate revenue estimate must account for the many economic impacts of tariffs in the U.S. and around the world, economists said. Those effects combine to reduce revenue, they said.
A 20% broad tariff would raise about $250 billion a year (or $2.5 trillion over a decade) when taking those effects into account, according to Tedeschi, citing a Yale Budget Lab analysis published Monday.
There are ways to raise larger sums — but they would involve higher tariff rates, economists said. For example, a 50% across-the-board tariff would raise about $780 billion per year, according to economists at the Peterson Institute for International Economics.
Even that is an optimistic assessment: It doesn’t account for lower U.S. economic growth due to retaliation or the negative growth effects from the tariffs themselves, they wrote.
Why revenue would be lower than expected
Tariffs generally raise prices for consumers. A 20% broad tariff would cost the average consumer $3,400 to $4,200 a year, according to the Yale Budget Lab.
Consumers would naturally buy fewer imported goods if they cost more, economists said. Lower demand means fewer imports and less tariff revenue from those imports, they said.
Tariffs are also expected to trigger “reduced economic activity,” said Robert McClelland, senior fellow at the Urban-Brookings Tax Policy Center.
For example, U.S. companies that don’t pass tariff costs on to consumers via higher prices would likely see profits suffer (and their income taxes fall), economists said. Consumers might pull back on spending, further denting company profits and tax revenues, economists said. Companies that take a financial hit might lay off workers, they said.
Foreign nations are also expected to retaliate with their own tariffs on U.S. products, which would hurt companies that export products abroad. Other nations may experience an economic downturn, further reducing demand for U.S. products.
“If you get a 20% tariff rate, you’re going to get a rip-roaring recession, and that will undermine your fiscal situation,” Zandi said.
There’s also likely to be a certain level of non-compliance with tariff policy, and carve-outs for certain countries, industries or products, economists said. For instance, when the White House levied tariffs on China in February, it indefinitely exempted “de minimis” imports valued at $800 or less.
The Trump administration might also funnel some tariff revenue to paying certain parties aggrieved by a trade war, economists said.
President Trump did that in his first term: The government sent $61 billion in “relief” payments to American farmers who faced retaliatory tariffs, which was nearly all (92%) of the tariff revenue on Chinese goods from 2018 to 2020, according to the Council on Foreign Relations.
The tariffs will also likely have a short life span, diluting their potential revenue impact, economists said. They’re being issued by executive order and could be undone easily, whether by President Trump or a future president, they said.
“There’s zero probability these tariffs will last for 10 years,” Zandi said. “If they last until next year I’d be very surprised.”
Why this matters
The Trump administration has signaled that tariffs “will be one of the top-tier ways they’ll try to offset the cost” of passing a package of tax cuts, Tedeschi said.
Extending a 2017 tax cut law signed by President Trump would cost $4.5 trillion over a decade, according to the Tax Foundation. Trump has also called for other tax breaks like no taxes on tips, overtime pay or Social Security benefits, and a tax deduction for auto loan interest for American made cars.
If tariffs don’t cover the full cost of such a package, then Republican lawmakers would have to find cuts elsewhere or increase the nation’s debt, economists said.
Wall Street is hoping April 2 will provide the clarity on the U.S. tariff front and a reprieve from the recent market volatility. However, many remain skeptical that any real clarity is coming any time soon. Stocks have been in turmoil this year, as investors struggle to price in the full breadth and depth of President Donald Trump’s policies that are shifting the lines of global trade. The S & P 500 was last more than 8% off its all-time high, after falling into correction territory earlier this year. The Nasdaq Composite is more than 13% off its recent peak. A clear enough blueprint from Trump when he takes to the Rose Garden on Wednesday afternoon to announce his plan for reciprocal tariffs could give investors some much-needed certainty. But few expect that will be the end of it. “Personally, I don’t believe that if you just get a framework announced, no matter what it is, that’s enough for a relief rally,” said Gabriela Santos, chief market strategist for the Americas at J.P. Morgan Asset Management. “I think you need a detailed framework, and you need there to be a certain amount of tariffs on a certain amount of countries for a certain amount of time for it to be able to be digested by the economy, — and ultimately by the markets, which I think have only started to price this in,” Santos said. There is hope of an April rebound for the stock market. The S & P 500 has done well in April when it’s started the month below its 200-day moving average, according to Oppenheimer technical strategist Ari Wald. Typically, it averages a 2.5% advance for the month, and is positive 73% of the time going back to 1950. The worst case scenario But investors will need some key questions answered around trade policy, in addition to some reassurance that the economic picture is not as bad as feared, for the market to truly rebound from here. Brett Ryan, senior U.S. economist at Deutsche Bank Securities, worries that a “maximalist” approach to tariff policy from the Trump administration — meaning a tariff on all 15 countries the U.S. has a persistent trade deficit with — would bring the average tariff rate to over 16%, from 10.5% where he said it’s currently projected to go to. In 2024, the tariff money collected as a share of total imports equated 2.5%, according to the Tax Foundation. For investors, that would further ding the outlook for economic growth and inflation, and raise fears of a stagflation scenario taking hold. In that maximalist scenario, Ryan expects real GDP growth will take a 1 to 1.5 percentage point hit. Fears of slower economic growth — sparked in part by tariffs — already have market observers cutting their year-end forecasts for the S & P 500. David Kostin, chief U.S. equity strategist at Goldman Sachs, lowered his 2025 target for a second time this year , to 5,700 from 6,200. What’s clear, at least, is that Wednesday could be the start, not the end, of a long road ahead. Christopher Harvey, head of equity strategy at Wells Fargo Securities, said he remains constructive on equities. However, worries the risks around the so-called liberation day are “not small” and could lead to a recession. “We have no inside beat on how long these new tariffs will last. We simply believe that the depth and the breadth of tariffs, and the number of stakeholders involved, creates a significant number of permutations and combinations,” Harvey wrote in a note. “Governments, which are generally not fast moving entities, may first determine whether they want to retaliate; even if they do not, we see a long road to the negotiation table.” “We believe the process (even under the most optimistic scenario) will require weeks/months of discussions before official changes can even be considered,” Harvey continued. “The bottom line is we think investors and investors’ portfolios need to get comfortable with uncertainty.” Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange!| Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
AQR Capital Management’s multistrategy hedge fund beat the market with a 9% rally in the first quarter as Wall Street grappled with extreme volatility amid President Donald Trump’s uncertain tariff policy.
The Apex strategy from Cliff Asness’ firm, which combines stocks, macro and arbitrage trades and has $3 billion in assets under management, gained 3.4% in March, boosting its first-quarter performance, according to a person familiar with AQR’s returns who asked to be anonymous as the information is private.
AQR’s Delphi Long-Short Equity Strategy gained 9.7% in the first quarter, while its alternative trend-following offering Helix returned 3%, the person said.
AQR, whose assets under management reached $128 billion at the end of March, declined to comment.
The stock market just wrapped up a tumultuous quarter as Trump’s aggressive tariffs raised concerns about an severe economic slowdown and a re-acceleration of inflation. The S&P 500 dipped into correction territory in March after hitting a record in February.
For the quarter, the equity benchmark was down 4.6%, snapping a five-quarter win streak. The tech-heavy Nasdaq Composite lost 10.4% in the quarter, which would mark its biggest quarterly pullback since a 22.4% plunge in the second quarter of 2022.