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Here's Why Katapult Holdings Stock Was Falling Today

By Keith Noonan – Aug 31, 2021 at 4:23PM

Key Points

  • After huge gains on Friday and Monday, the stock is cooling down a bit.

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After volatile trading, Katapult is down roughly 62% year to date.

What happened

Shares of Katapult Holdings (KPLT 6.95%) gave up some of their recent gains on Tuesday. The buy now, pay later fintech stock slumped roughly 4.8% in today's session, according to data from S&P Global Market Intelligence.

Katapult stock skyrocketed following news on Friday that Amazon would integrate Affirm Holdings (AFRM -1.73%) buy now, pay later services into its e-commerce platform. Affirm is a competitor in the broader space, but investors viewed the announcement as an indication that Katapult's services could see increased adoption.

Falling stock arrow and numbers over a hundred-dollar bill.

Image source: Getty Images.

So what

It's been a month of volatile trading for Katapult. The company's second-quarter earnings release arrived on Aug. 10 with news that management was withdrawing its full-year guidance due to shifting e-commerce and consumer-behavior trends. The announcement triggered a massive sell-off, but the stock has since seen some recovery. 

Katapult surged following the news of Affirm's partnership with Amazon, climbing roughly 49% from Friday through Monday. With such incredible gains in a short period of time, it's not surprising to see the stock's hot streak cool off a bit. The pullback occurred despite a positive coverage note published by Loop Capital analyst Anthony Chukumba before the market opened.

Now what

Chukumba reiterated his "buy rating" on Katapult and put a one-year price target of $7 per share on the stock. At the time of the note's publication, that represented roughly 47% upside. The analyst sees Katapult benefiting from Affirm's deal with Amazon.

With a market cap of roughly $465 million, Katapult looks relatively cheaply valued by some metrics, but it's probably also fair to say that it's not a low-risk stock. Buy now, pay later and lease-to-own fintech services are also a relatively new development, and it's possible that companies in the space will come under increased regulatory pressures or other challenges that limit growth opportunities. On the other hand, it's also possible that Katapult could skyrocket from current prices if the company attracts new partners and users. 

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.

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Stocks Mentioned

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

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

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