While likely no one will argue against turning back the clock and preventing the devastating COVID-19 pandemic from materializing if it were an option, the crisis — despite its many horrors — did offer a respite for tired, rundown worker bees. Suddenly, as an opinion piece from The Washington Post stated, America was having its pajama moment.
Of course, at some point, the extended staycation will likely end. Though work-from-home mostly entails replacing loose-fitting sweatshirts for slick office attire, Zoom (NASDAQ: ZM) means you can’t forget about hair care. In fact, Corporette — a fashion and lifestyle blog for high-achieving professional women — emphasized the importance of having neat, recently trimmed hair for job interviews, topped with a style that’s non-distracting yet conveys maturity and responsibility.
Outside the office, traditionally high-contact businesses and entertainment venues that closed during the worst of the pandemic have opened across the country, further incentivizing the importance of holistic hygiene. Therefore, the initial public offering (IPO) of Olaplex — billed as a science-enabled, technology-driven beauty company — arrives at a remarkably fortuitous time.
When Is the Olaplex IPO Date?
Another popular IPO capping off a flurry of activity this week from formerly private enterprises making their debut in the public arena, Olaplex represents a broader message concerning the great American comeback story. Yes, the company specifically focuses on hair care, but the underlying protein filament is a defining physical hallmark of humans and other mammals. Thus, the company is inextricably tied to the ongoing economic recovery.
One of the biggest beauty care offerings in recent memory, Olaplex, barring any unusual circumstances, will ink its debut on the IPO calendar on Sept. 30, 2021. Shares will trade on the Nasdaq Global Select Market under the ticker symbol OLPX. Financial powerhouses Goldman Sachs (NYSE: GS), JPMorgan Chase (NYSE: JPM), Morgan Stanley (NYSE: MS) and Barclays (NYSE: BCS) act as joint lead bookrunners for the deal.
Also providing joint bookrunning management services are Bank of America (NYSE: BAC), Evercore (NYSE: EVR), Jefferies Financial (NYSE: JEF) and Raymond James (NYSE: RJF).
Under the original terms of the IPO, Olaplex offered 67 million shares of its common stock at an estimated price range between $14 and $16 per unit. However, an updated prospectus filed with the U.S. Securities and Exchange Commission (SEC) revealed an increased forecasted pricing spectrum of $17 and $19. Per a report from Reuters, should OLPX stock hit the $19 target, the issuing company will command a valuation of $12.3 billion.
First arriving on the business scene in 2014, the Olaplex brand best resonated with the consumer base for its bond-building innovation; in fact, it’s more accurate to state that Olaplex pioneered the category. Per the website of Sephora — a beauty products retailer under the LVMH Moet Hennessy Louis Vuitton (OTCMKTS: LVMUY) umbrella — “Olaplex products feature first-of-their-kind, patented, bond-building technology, which relinks the broken disulfide bonds caused by chemical, thermal and mechanical damage to the hair.”
In January 2020, Advent International, a private-equity firm, acquired Olaplex. Per the prospectus, following the IPO, Advent will own 78.2% of the hair care firm.
Olaplex Financial History
While the common adage states that it’s not what’s on the outside that matters but the inside, the harsh reality is that society places incredible emphasis on how individuals look and present themselves. Of course, the existence of such pressure on superficialities is a different debate. What matters in terms of OLPX stock is that this pressure is a viable catalyst.
According to research from Fortune Business Insights, the global hair care market reached a valuation just a wisp over $75 billion in 2020. However, experts project that between 2021 and 2028, the sector will expand at a compound annual growth rate of 5.6%, culminating in a valuation of nearly $113 billion at the end of the forecasted period.
As with any segment leader, Olaplex has successfully converted the lucrative addressable market into tangible results. Per its Form S-1 filed with the SEC, Olaplex generated revenue of $148.2 million in 2019 under its predecessor business format (when Penelope Holdings Corp. owned the hair care firm). But in the pandemic-impacted year of 2020, the company recovered remarkably well, posting net sales of $282.3 million, up over 90%.
Even better, Olaplex is lighting up the income statement thanks to a hearty momentum carryover. In the 6 months ending June 30, the company generated top-line sales of $270.2 million, up a staggering 171% from the prior-year period’s tally of $99.6 million. Therefore, Olaplex is within 4.5% of its full-year 2020 revenue, and yet there’s an entire half-year period to go. If you’re thinking about OLPX stock, this momentum is certainly encouraging.
Adding to this narrative, Olaplex has already recovered its profitability trek following an understandably rough year in 2020. During the half-year period ending June 30 in 2020, the business suffered a net loss of $22.4 million. It did go on to post a net income of $39.3 million for the full year 2020.
This year, the firm posted a net income of nearly $95 million in the first half. As long as no catastrophes occur in the second half, OLPX stock will stand on rich ground.
Though a seemingly inconsequential consideration based on its mundane nature, the underlying power of OLPX stock is the sheer importance of hair care to women, Olaplex’s core consumer demographic. Per a revealing report from The Wall Street Journal, Birmingham, Alabama–based dermatologist Corey L. Hartman stated that “Up to 40 percent of women experience noticeable hair loss before the age of 40, with as many as 80 percent seeing hair loss by the age of 60.”
Further, the WSJ stated that for women, “hair loss can take a particularly harsh toll, as it’s often seen as a sign of impaired physical or mental health.” Indeed, both scientists and sociologists confirm that societies consider hair loss in men to be far more acceptable than in women. While no one is suggesting that Olaplex is the end-all, be-all to this problem, the company does provide hair-thinning solutions.
Moving forward, the WSJ notes that the thinning crisis will be a challenge due to the ongoing stress resulting from the COVID-19 pandemic. Admittedly, this setup is a terribly cynical reason to buy OLPX stock. Nevertheless, you cannot deny the existence of this positive catalyst.
To be fair, prospective buyers must recognize the risk factors in wagering on the personal beauty industry. Most notably, Knowlton Development Corp had expressed interest in September in moving forward with an IPO prospectus filed early this year. However, it suddenly postponed its public debut, in part due to the volatility of the market. Therefore, you must take this as a serious broader warning for OLPX stock.
How to Buy Olaplex IPO (OLPX) Stock
With OLPX stock set to launch in the market soon, you’ll want to understand the various nuances regarding equities trading prior to betting on this IPO. If you already know how to buy stocks, you have an advantage. If not, follow the steps below.
Step 1: Pick a brokerage.
Due to rising competition, several of the best brokers have begun offering pre-IPO access (or new shares at their initial offering price) for select opportunities. It’s something to consider for serious IPO investors.
- Best For:Active and Global TradersSecurely through Interactive Brokers’ website
- Best For:Beginnerssecurely through Robinhood's website
- Best For:Futures Tradingsecurely through TradeStation's website
- Best For:Experienced Traderssecurely through Freedom Finance's website
Step 2: Decide how many shares you want.
With no public market track record, all IPOs are inherently unpredictable. Therefore, choose a balanced share count that will limit your losses in case your thesis doesn’t pan out.
Step 3: Choose your order type.
Before placing your first order, learn these market concepts.
- Bid: The buyer’s best offer for a stock.
- Ask: The seller’s lowest acceptable price.
- Spread: The difference between the bid-ask price, the spread denotes market risk as this is also the profit margin for market makers. Narrower spreads feature higher volume and lower risk as the market maker has reasonable assurances of finding a home for the transacted shares. However, the opposite is true for wider spreads.
- Limit order: Buy or sell requests at a specific price, limit orders provide transparency but no execution guarantees.
- Market order: Market orders guarantee fulfillment but only at the current rate.
- Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders only exit positions at a specified price, but they carry non-fulfillment risks.
Step 4: Execute your trade.
Follow these steps to execute a market order:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
OLPX Restrictions for Retail Investors
Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons concerning potential conflicts of interest. As regulations officials typically have draconian personalities, you are best playing it safe rather than regretting oversights later.
Usually, IPO underwriters prefer distributing new issues to institutional investors. However, services like ClickIPO offer pre-IPO access to retail buyers for select enterprises seeking to go public. You should open an account if you wish to develop your investing acumen.
A Well-Coiffeured IPO
Despite the raging societal debate over the importance people place over physical looks, the simple inevitability is that most people will always care how they present themselves to the public. With sheltering in place no longer fashionable, OLPX stock benefits from both outside tailwinds and the underlying brand’s own resonance.
About Joshua Enomoto
His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.