Investors one-year losses grow to 87% as the stock sheds US$33m this past week

By
Simply Wall St
Published
February 23, 2022
NasdaqGM:KPLT
Source: Shutterstock

The art and science of stock market investing requires a tolerance for losing money on some of the shares you buy. But it's not unreasonable to try to avoid truly shocking capital losses. We wouldn't blame Katapult Holdings, Inc. (NASDAQ:KPLT) shareholders if they were still in shock after the stock dropped like a lead balloon, down 87% in just one year. That'd be enough to make even the strongest stomachs churn. We wouldn't rush to judgement on Katapult Holdings because we don't have a long term history to look at. Furthermore, it's down 50% in about a quarter. That's not much fun for holders. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.

With the stock having lost 14% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

View our latest analysis for Katapult Holdings

Katapult Holdings isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last year Katapult Holdings saw its revenue grow by 47%. That's a strong result which is better than most other loss making companies. So the hefty 87% share price crash makes us think the company has somehow offended market participants. There's clearly something unusual going on here such as an acquisition that hasn't delivered expected profits. What is clear is that the market is not judging the company on its revenue growth right now. Of course, markets do over-react so share price drop may be too harsh.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
NasdaqGM:KPLT Earnings and Revenue Growth February 23rd 2022

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. If you are thinking of buying or selling Katapult Holdings stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

Given that the market gained 2.0% in the last year, Katapult Holdings shareholders might be miffed that they lost 87%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 50%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 3 warning signs we've spotted with Katapult Holdings (including 1 which is a bit concerning) .

Katapult Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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