Please ensure Javascript is enabled for purposes of website accessibility

Why Katapult Stock Is Launching Skyward Today

By Anders Bylund – Nov 9, 2021 at 1:19PM

Key Points

  • The fintech startup’s revenue held steady year over year while the bottom line swung to a modest loss.
  • Some investors are giving the company a second look today after driving the stock lower over the past four months.

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

The computerized lease financing upstart filed third-quarter earnings on Tuesday morning, triggering a big jump.

What happened

Shares of Katapult Holdings (KPLT 0.94%) shot way up on Tuesday morning, peaking at an overnight gain of 28.4%. The hyperautomated provider of lease transactions for American retailers and consumers posted decent third-quarter results early Tuesday. By 11:47 a.m. EST, the supercharged jump had cooled down somewhat to a single-day return of 18%.

So what

Katapult's third-quarter sales landed at $71.7 million, just above the $71.2 million result from the year-ago period. However, the bottom line swung from a $0.21 net profit per diluted share to a net loss of $0.04 per share. The negative earnings move resulted from Katapult's operating expenses nearly doubling year over year as the company started scaling up its operations.

Stacks of hundred-dollar bills on a computer keyboard.

Image source: Getty Images.

Now what

Tuesday's jump was impressive, but it didn't come close to making up for Katapult's downward trend since hitting the stock market in June. Share prices have plunged 63% lower since June 9, when the company performed its merger with a special purpose acquisition company (SPAC) known as FinServ Acquisition Corp.

I'm intrigued by Katapult's focus on powering financial transactions with artificial intelligence and machine learning, but the company stands a long way away from sustained profits or meaningful revenue streams. This stock may eventually disrupt its chosen niche of the financial market. Right now, the question marks around Katapult's future outweigh the potential upside. I'm not a buyer of Katapult shares today.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

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