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"Leek" to save the old American cosmetics giant? Revlon shares soar 6.5 times after retail investors file for bankruptcy


2022-06-23 20:04:37

According to Dow Jones market data, on the 21st local time, the stock trading volume of the old American cosmetics company "Revlon" exceeded 186 million shares. That volume was seven times the average Revlon volume over the past 30 days, according to FactSet, a U.S. financial information firm. And according to data going back to February 1996, shares of Revlon have risen for three straight days, rising 317% during that time, the best three-day winning streak for the stock on record.

This comes after shares of U.S. makeup brand Revlon bottomed on June 13 as speculation about a potential bankruptcy filing heated up. Facing a debt burden of about $3.7 billion, on the evening of June 15, local time, the 90-year-old American cosmetics giant filed for bankruptcy protection with the U.S. Bankruptcy Court in the Southern District of New York.

↑ Revlon's stock price rise in the past 5 trading days

And after filing for bankruptcy, Revlon set off a wave of interest from retail investors. According to reports, shares of Revlon continued to soar this week, with the stock price soaring $2.08, or 34%, to close at $8.14 on the 22nd, up 650% from the all-time low set last week, becoming the latest in the beauty track. "Meme stock".

Investors in such stocks are typically young and inexperienced investors, typically trading at higher prices than estimates based on fundamental analysis, and making it difficult to justify a sharp rise in share prices, according to the "meme stock" profile. , is highly speculative and volatile. It was U.S. retail investors who reportedly drove Revlon shares soaring, trying to buy the dips for quick profits.

↑ The Revlon store on the Champs-Élysées in Paris more than 40 years ago

According to reports, Revlon is facing a heavy debt load, a supply chain disrupted by the epidemic, high inflation and other problems. Analysts said the company is unlikely to address these issues anytime soon. Although Revlon has always enjoyed a good reputation among users for its high quality, low price and easy-to-use products, its products and even the outer packaging have not been updated for many years. In addition, there is strong competition from the new generation of cosmetic brands, which can be promoted directly to users through social media platforms.

According to reports, Revlon was founded in 1932 and went public in 1996, and was once the second largest cosmetics manufacturer in the United States. But Revlon's sales have lagged in recent years, with sales in 2021 down 22% from 2017. Its shares have fallen more than 80% since the start of the year. As of the end of April, Revlon had total assets of $2.3 billion and total debt of $3.7 billion.

Revlon said a day after filing for bankruptcy that, subject to court approval, it expects to receive $575 million in debtor-in-possession financing from existing lenders, allowing the company to continue its day-to-day operations. The bankruptcy of Revlon could herald more trouble for the consumer goods brand, bankruptcy advisers said. High inflation, rising interest rates and signs and warnings of a recession will make shoppers open their wallets more cautiously, while the consumer goods industry could face more corporate restructuring.

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