Revlon Stock Surges After Bankruptcy Filing, Aided by Individual Investors

Traders have found the latest meme stock in the makeup aisle.

Shares of

Revlon Inc.

REV 34.32%

surged $2.08, or 34%, to close at $8.14 on Wednesday, up 650% from an all-time low set last week, as individual investors helped the cosmetics maker’s stock have its best three-day stretch on record following its mid-June bankruptcy filing.

Revlon’s shares have risen for three straight days, climbing 317% during that time—the stock’s best three-day stretch on record, according to data going back to February 1996.

Trading activity in Revlon has surged since last week’s lows. More than 186 million shares exchanged hands Tuesday, the most on record, according to Dow Jones Market Data, and seven times the stock’s average volume over the past 30 days, according to FactSet.

About 175 million shares traded Wednesday. Among Fidelity’s customers, which are largely individual investors, it was the second most actively traded stock Wednesday in terms of total buy and sell orders after

Tesla Inc.

TSLA -0.40%

Options activity tied to Revlon has rocketed. More than 210,000 contracts on Revlon were traded Wednesday, roughly seven times the total from the first five months of 2022. The most popular option was a bet that the shares would rise to $10, according to FactSet. 

More bearish bets have been placed on Revlon than nearly any other stock, according to Fintel, with about 37% of its shares available to the public currently sold short by investors who are betting they will fall.

Heavily shorted stocks can attract investors betting on a short squeeze, or a quick run up in share price that forces short sellers to close their positions, boosting the shares. 

That amount of short interest, plus a market capitalization of around $100 million as of its recent low, made Revlon’s stock “a perfect candidate for the most speculative retail cohort,” Vanda Research said in a note.

Revlon’s stock bottomed June 13 as speculation regarding a potential bankruptcy filing picked up. Facing a roughly $3.3 billion debt load, the cosmetics maker filed for chapter 11 bankruptcy two days later. 

The jump in Revlon’s shares recalls the

Hertz Global Holdings Inc.

saga of 2020. The rental-car company’s stock fell to a low of 56 cents after it filed for bankruptcy, then rocketed to $5.50 two weeks later, driven by individual investors’ enthusiasm for the shares. 

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