Katapult Holdings, Inc.
Katapult claims to be a “next-generation platform for digital and mobile-first commerce focused on the non-prime consumer,” providing point-of-sale lease-purchase options for non-prime consumers who cannot access traditional financing products.
On June 9, 2021, Katapult became a public company via business combination with FinServ, a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
On August 10, 2021, Katapult issued a press release announcing disappointing financial results for the second quarter of 2021 including a net loss of $8.1 million, compared to $5.1 million in net income for the second quarter of 2020. The Company further disclosed that it “observed meaningful [negative] changes in both e-commerce retail sales forecasts and consumer spending behavior” and retracted its full year 2021 guidance, claiming it could not “accurately predict our consumer’s buying behaviors for the remainder of the year.”
On this news, the Company’s share price fell $5.47, or more than 56%, to close at $4.26 per share on August 10, 2021, on unusually heavy trading volume.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Katapult was experiencing declining e-commerce retail sales and consumer spending, (2) that despite Katapult’s assertions that it was clear and compelling value proposition to both consumers and merchants, transforming the way nonprime consumers shop for essential goods and enabling merchant access to this underserved segment, Katapult lacked visibility into its consumers’ future buying behavior; and (3) as a result, Defendants’ statements about its business, operations, and prospects were materially false and misleading and/or lacked reasonable basis at all relevant times.
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