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Why Shares of Katapult Are Plummeting Today

By Bram Berkowitz – Dec 2, 2021 at 12:30PM

Key Points

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The company provided an update on gross originations over the past year.

What happened

Shares of the lease-to-own financing company Katapult Holdings (KPLT) had dropped by nearly 18% as of 12:15 p.m. ET after the company provided an update on gross originations.

So what

Katapult is similar to a buy now, pay later company, but it charges interest on purchases and will make loans to borrowers across a wider credit spectrum. The company reported that gross originations between Oct. 1, 2020, and Nov. 30, 2021, totaled more than $40 million, which represents a decline of more than 3% from the same period a year before.

A person sits in a chair. Above them are several question marks and a descending red arrow.

Image source: Getty Images.

"Our quarter-to-date Gross Originations were down 3.2% year-over-year, which reflects many of the same economic trends we saw in the 3rd quarter continuing into the 4th quarter," CEO Orlando Zayas said in a statement. "We look forward to seeing how December 2021 unfolds. We will provide more details in regard to Gross Originations and other key metrics when we report Fourth Quarter and Full Year 2021 results in 2022."

Zayas said on the company's third-quarter earnings call in November that "significant supply chain disruptions are creating challenges for our merchant partners to secure inventory and fulfill orders in a timely matter, which is pressuring their sales and consequently our revenue and gross originations."

Now what

Lots of fintech stocks are taking a beating right now with everything that is going on from higher inflation and fears regarding the omicron coronavirus variant. There are a lot of unknowns and worries over these technology lenders, the quality of the credit they originate, and demand heading into what could be difficult market conditions in 2022.

But Katapult trades at a pretty low valuation, so if it can get the growth engine going again, investors will likely come back to the company.

Bram Berkowitz 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.

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