Sitting pretty? Revlon stock jumps after bankruptcy filing

Shares of Revlon (ROUND) climbed nearly 35% on Wednesday afternoon in volatile trading. The stock is now up more than 300% in the past three sessions alone – from around $2 to around $8 – after falling 13% on the day the company announced its Chapter reorganization plan. 11. (Talk about putting lipstick on a pig…)

The surge in Revlon shares is eerily reminiscent of what happened with the car rental company Hertz (HTZ) in 2020 after filing for bankruptcy. Shares initially soared thanks in part to positive mentions from traders on Reddit, who were betting against short sellers who believed Hertz shares would continue to fall.

When a company declares bankruptcy, most investors generally get nothing out of the ensuing reorganization. Bondholders and other creditors are often on the front line get some of their money back, but stockholders typically see their investments wiped out once new shares are issued after bankruptcy.

Which makes Revlon’s surge all the more special. Some posters on Reddit’s popular WallStreetBets board even speculated on the potential rise of Revlon shares.

A Reddit user named pikatruuu (much like the yellow Pokemon character) noted the comparison to Hertz, saying the car rental giant’s shares had increased eightfold during its bankruptcy process.

“Revlon is currently the 11th best-selling stock… It’s a pretty iconic brand. Is there any chance it will become a stock meme?” pikatruuu wrote. Then again, pikatruuu also pointed out that what happened with Hertz “is a rare occasion of course”.

That hasn’t stopped some extremely enthusiastic users from pumping up the prospects for the title.

“Is revlon the gamestop of 2022?” asked wonderwoman009.

“No idea. But the party is now,” pikartruuu replied, adding that “if that [subreddit] can jump on the bandwagon, I don’t see why it’s not over $10.”

Others were even more optimistic, expressing their love for the stock with messages in ALL CAPS.

“REVLON TO THE MOON GOES $12,” said a user named One-Relationship-143.

But there seemed to be at least a voice of reason discussing Revlon on Reddit.

“If you had money you were just going to spend on something to do,” wrote Electronic-Ad6420, “so yes you should buy some.”