Revlon Is The Worst Stock In America

By Douglas A. McIntyre Published Oct 22, 11:23AM EDT

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Revlon Is The Worst Stock In America — © BalkansCat / iStock Editorial via Getty Images

For some reason, it has become popular in the last year to trade the stocks of companies that are having catastrophic financial collapses. Among these is the beauty products company Revlon. Perhaps people believe they can make money because the price has been so volatile. It requires genius, guts, luck, or perfect timing to turn a profit.
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Revlon went into Chapter 11 bankruptcy in June. It will be delisted from the NYSE shortly. The stock tripled a few days after the Chapter 11 filing. It has just collapsed.

The delisting news cut the share price of Revlon by 85% in a single day to $1.76. That is down well over 90% in less than two years.

Anyone with sense could have seen the Chapter 11 filing coming. Revenue has fallen for years.

After it ran out of money, Revlon received a $1.4 billion loan in August. However, the loan provision means that common shareholders may have nearly worthless stock. Revlon told the bankruptcy court as much later in August.

Gamblers, or investors who believe they are smarter than everyone else, have continued to churn the shares. If people buy in large enough share volume, a price change of a few pennies can mean a profit. It also means that the value of a position could be nearly wiped out in a day.

There is no reason to think Revlon will recover. Its product mix has been poor, making it a beauty products company with an eroding customer base. Beauty products are among the most crowded consumer categories in the developed world. Revlon has still a badly created product mix, and enough money to last a few months if results do not turn around.

Revlon’s stock is worthless, and that won’t change.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.