Various speculative high-growth stocks are performing well today. Indeed, for investors looking at Katapult (NASDAQ:KPLT) and KPLT stock, this is certainly the case.
Shares of KPLT stock are currently more than 11% higher today on impressive volume. More than double the daily average number of shares have traded hands, and there’s still time left in the trading day.
It appears investors have become enamored with the short squeeze potential of this stock. And we’ll get to that in a minute.
However, Katapult’s e-commerce focus is another reason investors continue to be bullish on the de-SPAC company. As a company that came to market via a reverse SPAC (special purpose acquisition company) merger, Katapult has been beaten to a pulp by the market of late. Despite hitting a high of nearly $20 per share earlier this year, KPLT stock has since declined to nearly $3 per share on very bearish sentiment. This level of extreme sentiment tends to revert over time. Accordingly, investors bullish on the e-commerce space appear to still feel this stock is too cheap at the $6 level. Hence, the rally continues with this company.
Katapult’s e-commerce point-of-sale technology is intriguing for two reasons. First, as we’ve seen with other hypergrowth stocks in this space, the growth trajectory is real in this segment. Investors looking for the next Shopify (NYSE:SHOP) or Lightspeed (NYSE:LSPD) have reason to like what Katapult has to offer.
Secondly, Katapult focuses on the sub-prime or non-prime consumer segment with its offering. These consumers are higher-risk, but higher-reward in nature. Accordingly, this is a hypergrowth stock for only the most aggressive of investors. Accordingly, it’s unsurprising to see volatility with these names.
That said, let’s dive into what’s behind today’s rally in Katapult.
Surge in Interest for Short Squeeze Stocks Catapulting KPLT Stock Higher
As we’ve pointed out before, short squeeze stocks are once again top of mind for investors. Indeed, Katapult is a company that fits the description of a short squeeze candidate well.
The company’s extremely high short interest and borrow-fee rate provides a perfect setup for such a squeeze. Additionally, the company’s low price per share and surging retail investor interest lends to the idea that this stock could be a squeeze waiting to happen.
That said, as with all potential short squeeze plays, volatility can be a friend or a foe. Depending on market sentiment and other factors outside of investors’ control, this is a stock that can swing wildly in both directions. Indeed, we’ve seen this play out already.
Accordingly, investors ought to be cautious with such plays right now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.