Are Katapult Holdings about to launch a Virtual Credit card ?

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  • Orlando Zayas runs Katapult, a lease-to-own company that accepts shoppers rejected by lenders.
  • Katapult went public one year ago via a SPAC merger and opened at $14 a share under the NASDAQ ticker KPLT. It is now trading at a discount of 90 percent of that price.

Many credit-card applicants gets rejected . Orlando Zayas, the CEO of the fintech platform Katapult, knows what it feels like. He was one of them

A Puerto Rico-born boy whose father died when he was 10, Zayas had to pay his own way at the University of Houston. He was always mindful of his money, but Zayas was rejected for a Gap credit card in 2008 like many hardworking people.

Now the former General Electric executive runs Katapult, which allows consumers turned down for credit by popular lenders, such as Affirm, to buy tires, laptops, and other goods on a lease-to-own basis. Zayas had a 3.6% stake and 3 million exercisable options worth some $92 million combined when they floated trough an SPAC one year ago.

Customers pay a $45 initiation fee, and the lease can be twice the cash price of the purchase. But it can still be cheaper to use Katapult than take on credit-card debt because there are no late fees or compounding interest. Items can be returned within 30 days to Katapult, and if customers pay within 90 days, the cost is only 5% above the cash price, excluding the $45 fee according to they’re own web site.

Katapult’s revenue, which was $17 million when Zayas took over in 2017, topped $200 million in 2020, in part because of COVID-19. The pandemic accelerated the New York firm’s timeline for going public.

Katapult had thrived during the pandemic by accepting customers who were rejected by other lenders. But they fell from grace when they withdrew the guidance for future earnings, and like some of the other big names in consumer finance they went into tough times.

Still they have almost 80 millions of cash reserves, and rumours has it they are looking at rolling out virtual credit card offerings to the consumers. It goes something like this : From your Chrome browser you download an extension that when you log into Katapult will enable you to buy or lease now, and pay later from the convenience of your own home without having a physical card. They briefly advertised it on social media. They have been recruiting more staff lately, and have been working hard to attract more merchants . If they can come up with a virtual credit card deal, and another waterfall agreement like Affirm, the share price could easily go back up past 3 dollar a share for a start.

This is not financial advice, just the thoughts of the writer. He is also a long suffering shareholder of Katapult Holdings that thinks the tide are about to turn for the company. What do the readers see the future share price at ?

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