Catapult Sports (ASX:CAT) Plunges on Tech Rout: Should You Buy This Dip or Wait?

Catapult Sports (ASX: CAT) fell 8% yesterday as a broader tech selloff swept the ASX, dragging the sector down 6%. The sports technology company now trades around $5.35, down 27% from its August high of $6.93, despite posting 50% EBITDA growth and 95% customer retention in its latest results. This disconnect between price and performance suggests the selloff is about sector sentiment, not company fundamentals, creating what we believe could be a genuine buying opportunity for investors who can look past the noise.

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Catapult Sports Delivers Strong Growth Across Key Metrics

The fundamentals tell a clear story of accelerating momentum. Annual Contract Value (ACV), essentially the recurring revenue the company has locked in, reached US$115.8 million, up 19% year-over-year, demonstrating robust demand for Catapult’s wearable technology and video analysis platforms. More importantly, management EBITDA surged 50% to US$9.7 million. This margin expansion is a key signal that the business model is working, with the company achieving operational leverage as it scales.

Customer metrics paint an equally compelling picture:
• 3,878 professional teams now use Catapult globally (up 12%)
• 95% customer retention rate maintained
• Strong balance sheet with cash and no debt

In our view, this combination of growth and retention indicates strong product-market fit. Teams don’t just trial Catapult’s technology; they embed it into their operations and keep renewing. In the Software-as-a-Service (SaaS) world, where recurring subscriptions drive long-term value, that’s exactly what investors want to see.
The company’s debt-free balance sheet provides further comfort. This financial stability becomes particularly valuable during market volatility, as it eliminates the risk of forced capital raising at depressed prices. Management has the flexibility to invest in product development and pursue growth opportunities without funding pressure.

Why This Selloff Creates an Opportunity

Yesterday’s selloff appears to be pure sector rotation rather than company-specific concern. When tech stocks collectively drop 6% in a session, quality businesses often get swept up in the selling regardless of their individual merit. We believe this creates opportunities for investors who can separate market noise from fundamental reality.
Bell Potter maintains a buy rating on Catapult with a $6.50 price target, implying more than 20% upside from current levels. That target reflects analyst confidence that the company’s growth trajectory justifies a higher valuation. The gap between today’s price and that target widened significantly during yesterday’s rout, potentially offering an attractive entry point.
The investment case rests on continued ACV growth and expanding margins. If Catapult can sustain its 19% growth rate while pushing EBITDA margins higher, the current valuation could prove quite reasonable. The company’s technology platform has already proven its value across elite sports, and expansion into adjacent markets could drive further upside.

The Investor’s Takeaway

At $5.35, Catapult Sports appears to offer a compelling risk-reward profile for growth-oriented investors. The 27% pullback from recent highs occurred despite accelerating fundamentals, which suggests the market has overreacted to sector weakness rather than any deterioration in Catapult’s business quality.
That said, tech sector volatility remains a near-term risk. If broader market weakness persists, CAT could face additional downward pressure before stabilising. Conservative investors might consider dollar-cost averaging into positions rather than committing capital all at once.
For those willing to look through short-term noise, Catapult’s combination of strong growth, high retention, expanding margins, and a solid balance sheet positions it well for its next phase. The key will be watching whether management can maintain momentum and continue converting growth into improving profitability. Based on current fundamentals, we believe the selloff has created an opportunity worth serious consideration.