Forget GameStop, AMC, bitcoin and other cryptocurrencies. Revlon, the makeup and cosmetics company that filed for bankruptcy last week, is the latest company to step into the meme-stock spot among the army of investors on Reddit.
The company’s shares rose nearly 35% on Wednesday afternoon (22), after volatile trading. Shares are up more than 300% in just the last three sessions — from around $2 to around $8 — after falling 13% on the day the company announced its reorganization plan.
Revlon’s rise in assets is eerily reminiscent of what happened to car rental company Hertz in 2020 after it filed for bankruptcy. The shares initially rose thanks to positive mentions from traders on Reddit, who were betting against short sellers who thought Hertz shares would continue to fall further.
When a company declares bankruptcy, most investors typically gain nothing from the reorganization. Bondholders and other creditors are often the first in line to get some of their money back, but equity holders often have their investments wiped out when new shares are issued after bankruptcy.
Which makes Revlon’s rise even more peculiar. Some posters from the popular panel WallStreetBets Reddit were even speculating about how much Revlon’s stock could go up.
A Reddit user named pikatruuu (sort of like Pokemon’s yellow character) noted the comparison to Hertz, saying the car rental giant’s shares rose eightfold during its bankruptcy process.
“Revlon is currently the 11th best selling stock… It’s quite an iconic brand. Is there a chance it could become a meme action?”. On the other hand, pikatruuu also pointed out that what happened to Hertz “is a rare occasion, of course.”
That hasn’t stopped some extremely enthusiastic users from raising the stock’s outlook. “Is revlon the Gamestop of 2022?” asked Wonderwoman009.
“I have no idea. But the party is going on now,” pikartruuu replied, adding that “I don’t see why it’s no more than $10.”
Others were even more optimistic. “Revlon goes to $12,” said a user named One-Relationship-143. User Electronic-Ad6420 wrote: “If you had the money, you should buy some.”
Source: CNN Brasil
