Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Katapult Holdings Stock Is Skyrocketing Today

By Keith Noonan – Aug 30, 2021 at 11:48AM

Key Points

  • Katapult Holdings stock is soaring following news of a partnership between Amazon and Affirm Holdings.
  • The company's core lease-to-own services do not require users to pass a credit check.
  • Katapult is rebounding after the big sell-off that followed its Q2 earnings release earlier this month.

Motley Fool Issues Rare “All In” Buy Alert

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A huge partnership for a competitor is powering big gains for the fintech stock.

What happened

Shares of Katapult Holdings (KPLT 6.95%) are surging in Monday's trading. The company's stock was up roughly 36% in the session as of 11:00 a.m. EDT, according to data from S&P Global Market Intelligence.

Today's rally comes on the heels of a roughly 17% increase for the company's share price on Friday and appears to be driven by favorable developments for an adjacent company in the buy-now-pay-later space. Affirm Holdings' (AFRM -1.73%) consumer financing services are being integrated into the Amazon e-commerce marketplace, allowing users to purchase items at no initial cost and then pay them off in installments. Affirm Holdings stock is up roughly 41% in today's trading as of this writing. 

A wad of cash in a shopping cart.

Image source: Getty Images.

So what

Katapult Holdings is making huge gains thanks to indications that its services could soon be usable through Amazon and other e-commerce players, but the gains also have to be put in context. The stock plummeted after mixed second-quarter results published on Aug. 10 and news that the company was withdrawing its full-year sales guidance.

KPLT Chart

KPLT data by YCharts

Management cited shifting e-commerce and consumer spending behavior forecasts as reasons for taking its targets off the table, but new integration with major online retailers would likely take much of the sting out of the withdrawn guidance. 

Katapult Holdings is a fintech company that provides financing services, with most of its offerings being tailored to users who might not otherwise be able to secure funding options. However, it's much smaller than Affirm Holdings, and it's possible that leading e-commerce companies and users will primarily opt to deal with the larger player. 

Now what

Prior to withdrawing its full-year estimates, Katapult Holdings had been expecting revenue to come in between $425 million and $475 million. With a current market capitalization of roughly $475 million and what looks to be a relatively asset-light business model, the company looks cheaply valued from some vantages. Integration with Amazon or other large e-commerce platforms would be a substantial boon for Katapult and potentially help spur adoption for its services among millions of new users.

On the other hand, there's still a lot of uncertainty on the horizon for the business. It's unclear whether Katapult will be able to secure favorable partnerships with major e-commerce players, and buy-now-pay-later providers also risk having their models disrupted by new regulations. The stock is still beaten down following its Q2 report and could go on to see more big gains in the near term, but investors should move forward with the understanding that wins for Affirm Holdings won't necessarily translate into big gains for Katapult stock. 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Affirm Holdings, Inc. and Amazon. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Katapult Holdings, Inc. Stock Quote
Katapult Holdings, Inc.
$0.96 (6.95%) $0.06
Amazon Stock Quote
$93.41 (-0.77%) $0.72
Affirm Holdings, Inc. Stock Quote
Affirm Holdings, Inc.
$13.08 (-1.73%) $0.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.