What Happened?
Shares of hair care company Olaplex (NASDAQ: OLPX) jumped 3.8% in the afternoon session after the release of a favorable Consumer Price Index (CPI) report, which showed inflation cooling more than anticipated. The July report from the Bureau of Labor Statistics indicated a year-over-year inflation rate of 2.7%, just below the 2.8% economists had forecast. This suggests that price pressures on consumers may be easing. Particularly beneficial for the sector was the news that the food index remained flat, with grocery prices even declining by 0.1% month-over-month. This development is seen as a positive for the profitability of food, beverage, and personal care companies, as lower input costs and increased consumer purchasing power could boost sales.
A Federal Reserve official's comments on the same day, noting that consumer spending fundamentals remain solid, further bolstered investor confidence in the sector's resilience.
After the initial pop the shares cooled down to $1.35, up 1.9% from previous close.
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What Is The Market Telling Us
Olaplex’s shares are extremely volatile and have had 51 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 4 days ago when the stock dropped 8.7% on the news that the company's second-quarter 2025 earnings report revealed a mixed performance, as its first revenue growth in nine quarters surpassed expectations, overshadowing a swing to a net loss. The premium hair care company's net sales increased 2.3% year-over-year to $106.3 million, beating analyst forecasts and marking its first positive sales growth in nine quarters. However, this top-line beat was contrasted by deteriorating profitability. The company swung to a GAAP loss of $0.01 per share, which was in line with analysts' estimates but down from a profit of $0.01 per share in the same quarter last year. The decline in profitability was driven by a significant drop in its operating margin, which fell to -1.1% from 15.7% a year ago, as expenses like marketing and administrative overhead increased. Despite the lower profitability, investors appeared to focus on the better-than-expected revenue and the return to growth, which sent shares higher.
Olaplex is down 20.1% since the beginning of the year, and at $1.35 per share, it is trading 48.5% below its 52-week high of $2.62 from September 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 $55.10.
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