Olaplex tries to recover after drastic drop since its IPO

When prestige hair care brand Olaplex first debuted on the Nasdaq in late 2021, it surpassed pricing predictions and gained momentum fast.

The company opened at $25 per share, an increase from its initial public offering pricing estimates. It was part of a broader group of retailers that went public that year amid an IPO boom. Olaplex hit its all-time high just a few months after its public debut, reaching a price of $29.41 on Jan. 3, 2022.

But that run didn’t last long.

Since its IPO, Olaplex’s stock performance has plunged drastically, losing nearly 95% of its value. The S&P 500, meanwhile, has gained more than 50% over the same period. Now, the company is hoping to turn its performance around.

“We are encouraged by the momentum we are seeing as we work to build a business that lives up to our breakthrough science, and we look forward to the journey ahead,” CEO Amanda Baldwin told CNBC in an exclusive statement.

Olaplex declined to comment to CNBC beyond that statement.

The company has a range of products, sold directly to consumers and to professional salons, that use a bond-building technology to strengthen and restore hair.

Its stock began sinking due to weakened demand and regulatory challenges in 2022, but some of Olaplex’s main issues were borne out of an early 2023 lawsuit filed against the company that accused the brand of using harmful ingredients. It involved nearly 30 women who alleged that the products caused hair loss and hair damage, citing an ingredient called lilial.

The company aggressively denied those claims and said it had removed the lilial ingredient from all of its products, but consumers on social media continued to attack the brand, its formulations and the alleged side effects.

Though the case was dismissed later that year, the allegations left lasting damage on the brand’s reputation. Over the course of that year, its stock sank more than 50% – and it never recovered. Shares of Olaplex are now trading at less than $1.50, with a market cap of roughly $1 billion.

In fiscal year 2023, Olaplex said its net sales decreased 47.8% in the U.S. compared with the previous year, while its net income sank 74.8%.

In the meantime, the hair care industry added new players that fought for Olaplex’s falling market share. Companies like K18, Ouai and Redken have crowded the playing field, gaining popularity while Olaplex battled social media backlash.

In late 2023, Olaplex recruited Baldwin, the former CEO of beauty brand Supergoop, to helm the company and turn around its brand strategy.

At the time, Baldwin said she saw “tremendous opportunity” to help the brand by deepening engagement with its customer base, innovating new products and sharpening its press strategy.

“Olaplex stands apart as a category creator redefining what is possible through the combination of beauty and science,” Baldwin said in a statement in late 2023.

Late last month, the company launched a new product, a pre-shampoo treatment intended to revitalize hair that marked…