What happened
Shares of Katapult Holdings (KPLT 2.89%) got crushed on Tuesday following the company's second-quarter earnings report. The stock ended today down roughly 56.4%, according to data from S&P Global Market Intelligence.
Katapult published its second-quarter report before the market opened on Tuesday, and investors had a lot to chew on. The company posted a net loss of $8.1 million, swinging from a profit of $5.1 million in the prior-year period. Adjusted net income for the period was $1.5 million, down roughly 70% year over year. The company also announced that it was withdrawing detailed earnings guidance for the remainder of the year in light of new uncertainty.
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So what
Katapult's revenue climbed 27.6% year over year in the second quarter to reach $77.5 million. At the end of the quarter, the company's year-to-date revenue stood at $158.1 million, up 52.6% from the $103.6 million in sales that it had racked up at that point in 2020.
The second-quarter sales results were far from terrible, but gross originations data and management's decision to retract guidance appear to have spooked investors. Gross originations (a metric for tracking new loan creations) came in relatively weak at $64.4 million, up roughly 1% sequentially but down 17% year over year. And this trend suggests that future sales growth could come in weaker than previously anticipated.
The company cited changes to e-commerce retail sales forecasts and shifting consumer spending behavior, and the implementation of policies in response to the pandemic as reasons for withdrawing its full-year guidance.
Now what
Katapult now has a market capitalization of roughly $410.5 million. The company had previously been guiding for sales to come in between $425 million and $475 million for this year. The removal of guidance for the year raises some red flags, but the company's valuation still looks pretty cheap by some conventional metrics. However, with management withdrawing guidance and second-quarter originations data signaling potential weakness in the near term, investors have to weigh signs that some of the company's growth avenues may be narrowing.
