Revlon meme’s latest stock rises over 50% in heavy trade
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By David Randall
NEW YORK (Reuters) – Nail polish maker Revlon Inc continued its surge as the latest so-called meme stock sparked an outpouring of interest from retail investors as the stock gained more than 50% in intensive exchanges on Wednesday.
Shares of the $330 million market-cap company, which filed for bankruptcy last Wednesday, have risen more than 400% since its lows on June 14, as retail investors appear to pile into the company.
Overall, shares of Revlon were the second most traded by Fidelity brokerage clients on Wednesday, after only shares of Tesla Inc, according to the company.
The company’s market cap was below $100 million before its recent surge, one of the characteristics that made it the “perfect fit for the most speculative cohort of retailers,” according to Vanda Research. Retail traders bought $8.3 million worth of Revlon shares on Tuesday, the highest on record for the stock, Vanda said.
Late Wednesday afternoon, the stock rose 48% to $8.98 after rising more than 50% earlier.
The rally was reminiscent of the more than 500% rise in shares of car rental company Hertz Corp after it filed for bankruptcy in May 2020 following economic restrictions at the start https://www.Reuters.com/legal/transactional /hertz-will-wheels-off-post-bankruptcy-registration-2021-11-09 from the coronavirus pandemic.
Vanda estimated short-term interest in Revlon stood at 37.6% earlier this week, making it an attractive target for retail traders who have in the past stacked stocks in order to force a short compression – an unwinding of bearish bets that occurs when a stock’s price rises rapidly and can exacerbate gains on a company’s stock.
However, such an outcome is unlikely to be driving Revlon’s recent rise, said Ihor Dusaniwsky, chief executive of research firm S3 Partners.
“Recent price moves are due to long-term buying and selling and not short-selling and hedging – in other words, a meme stock,” he said.
Short sellers lost $15.3 million in market value losses, or 139%, for the month of June, according to S3 Partners.
Revlon shares are down 22% year-to-date.
(Reporting by David Randall in New York; Editing by Matthew Lewis)