First there was Hertz, then there was GameStop and now enter Revlon Inc.
Revlon’s stock has surged for the third day in a row as traders bet on the struggling beauty company that filed for Chapter 11 bankruptcy just last week.
The 90-year-old New York-based retailer, whose brands include namesake Revlon, Elizabeth Arden and Almay, saw its share price surge 45 percent, or $2.70, to $8.76 at around 2 p.m., marking a rise of more than 300 percent over the past three days when it was as low as $2.
According to reports, positive comments about the beauty company on Reddit fueled the initial surge and since then over 100 million shares have traded hands.
“A spike in social boards chatter and OTM [out-of-the-money] call option volumes over the past week confirm that retail crowds are behind the latest moves higher,” said analysts at Vanda Research in a note to clients.
In 2020, Reddit comments ignited a surge in Hertz’s share price after it filed for bankruptcy, while in 2021 chatter in a forum on the site led to GameStop’s stock skyrocketing.
Revlon has been struggling with a hefty pile of debt listed as $3.7 billion that it spent much of 2020 renegotiating, which enabled it to avoid a more formal restructuring process then. But supply chain issues, soaring inflation and increased competition from the likes of The Estée Lauder Cos. and Coty Inc. and a plethora of digital start-ups have only exacerbated the situation, and these factors combined with loans coming up for renewal forced it into bankruptcy.
“Consumer demand for our products remains strong — people love our brands, and we continue to have a healthy market position,” Debra Perelman, Revlon’s president and chief executive officer, said last week. “But our challenging capital structure has limited our ability to navigate macro-economic issues in order to meet this demand. By addressing these complex legacy debt constraints, we expect to be able to simplify our capital structure and significantly reduce our debt, enabling us to unlock the full potential of our globally recognized brands.”
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