What Happened?
Shares of hair care company Olaplex (NASDAQ: OLPX) jumped 6.5% in the morning session after the company reported third-quarter financial results that beat Wall Street's expectations for revenue and earnings per share, and reaffirmed its full-year guidance. Although the hair care company's net sales fell by 3.8% year-over-year to $114.6 million, the figure came in ahead of analyst forecasts. Similarly, its earnings per share (EPS) of $0.02, while flat compared to the same period in the previous year, also surpassed consensus estimates. Investors appeared to focus on these positive results rather than the year-over-year decline in sales. The company's decision to maintain its full-year sales forecast likely provided an additional layer of confidence, signaling a stable outlook despite the sales dip in the quarter.
After the initial pop the shares cooled down to $1.10, up 2.3% from previous close.
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What Is The Market Telling Us
Olaplex’s shares are extremely volatile and have had 42 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock dropped 0.5% on the news that Telsey Advisory Group maintained its "Market Perform" rating on the stock, while also keeping a price target that suggested significant potential upside. Although the rating did not change, the analyst firm's price target of $2.00 implied a possible 90.48% increase in the stock's value. This detail likely caught the attention of investors. The significant gap between the stock's trading price and the analyst's valuation appeared to be the main driver for the positive move, even without a formal ratings upgrade.
Olaplex is down 35.2% since the beginning of the year, and at $1.10 per share, it is trading 49.5% below its 52-week high of $2.17 from December 2024. Investors who bought $1,000 worth of Olaplex’s shares at the IPO in September 2021 would now be looking at an investment worth $44.69.
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