Last week, the iconic makeup brand Revlon filed for Chapter 11 bankruptcy. The reasons for the filing were numerous and included mounting debt, increased competition from celebrity-endorsed beauty brands, supply-chain issues, and the continued slow death of American malls.
Since the start of 2022, Revlon stock has crashed. The stock price on January 3 was $11.66 per share. But on June 16, when Revlon announced it was filing for Chapter 11 bankruptcy, the stock sat at just $1.95 per share.
However, since the bankruptcy filing was announced, Revlon stock has soared. Still below its January highs, the company’s stock closed yesterday at $6.06 per share — a threefold increase since the bankruptcy declaration, and a 62% increase in the stock price in just one day.
And at the time of this writing, Revlon stock (NYSE: Rev) is up another 32% in pre-market trading to over $8 per share.
So what is going on? Why has Revlon’s stock soared nearly four times since it declared bankruptcy last week? The general consensus seems to be that investors think it’s likely that Revlon will be acquired by another company because of its relatively low stock price. as Jacques notes, reports suggest that Reliance Industries Limited is interested in a possible acquisition. Reliance Industries is an international conglomerate based in Mumbai, India. It has interests in everything from petrochemicals to retail.
Of course, no potential takeover offers have yet materialized, and if no offers do materialize, Revlon stock could reverse the gains it made this week as fast as it made them.