Klarna CEO applauds Apple's entry into Buy Now, Pay Later; says its model is 'recession proof'
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Klarna CEO Sebastian Siemiatkowski said Friday that the entry of Apple (AAPL) into the Buy Now, Pay Later fintech space is an "amazing" development that underlines the value of the business model.
Siemiatkowski added that the business model itself is "extremely recession-proof" because it relies on smaller balances for consumers and has an underwriting structure that is more flexible than the ones employed by banks or credit card companies.
"If we change our underwriting model, in just two months, 50% of the balance sheet is underwritten according to a new model," he said, arguing that this ability to swiftly change its approach when economic conditions shift gives "us a very strong, recession-proof model."
Siemiatkowski's comments came a day after Apple (AAPL) announced that it was pushing forward with its own Buy Now, Pay Later offering. This put pressure on the fintech sector, as investors worried about the prospects of the world's largest tech company swamping competition in the market.
As a result, Affirm Holdings (AFRM) and Block (SQ) dropped more than 9% during Thursday's session, dragged down by the AAPL news. Meanwhile, SoFi Technologies (SOFI) and Upstart Holdings (UPST) both fell more than 8%, while PayPal (PYPL) suffered a decline of about 4%. 
On the prospects for Klarna, a private company based in Sweden, Siemiatkowski acknowledged that the firm has been running a loss and recently announced job cuts in an effort to control costs. However, he added that the fintech had been profitable until 2018 but has lost money in recent years as it spent heavily on U.S. expansion.
Looking ahead, the Klarna CEO said U.S. operations would edge closer to profitability as its mix between new customers and returning customers becomes more favorable. He explained that the costs of acquiring new customers and the added data the firm has for returning customers make the second category more profitable.
Fintech has come under pressure in 2022 amid a general risk-off attitude on Wall Street. AFRM, for example, has dropped about 78% during the year so far, falling from above $95 at the end of 2021 to a level just above $21 now.

Still, many remain bullish on the sector. For an example, see why Seeking Alpha contributor Jared Simons calls AFRM "built to win."