Olaplex Falls Out of Favor on Wall Street

Olaplex has lost some of its luster among investors. The hair care company said it now expects full-year sales to be in the range of $704 million to $711 million. The midpoint of that range is roughly 14% below the $826 million management had reiterated for 2022 when it released earnings in August. As a result, Olaplex stock has fallen 49% to $5.03.

The company blames its grim forecast to macroeconomic factors. But analysts point to product discounts, slower growth in the customer base and inventory cuts. Olaplex executives knows something's up. The company said it will discuss medium-term metrics at an “appropriate time in 2023” when it has more visibility. Olaplex had previously said its long-term top-line growth forecast is in the 25% range. That uncertainty around its long-term sales adds more pressure on the stock price.

Moreover, Chief Operating Officer Tiffany Walden is departing after seven years with the company, a tenure that started around the time the brand was launched in 2014. While Olaplex said she’s transitioning to an advisory role, investors likely see her departure during challenging times for the company as a red flag, according to analysts.

Still, Olaplex’s patent-protected technology should help it bounce back, according to industry observers.