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.
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.
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.