There's an old saying on Wall Street that investment advisors love to ignore: "Never try to catch a falling knife."
Olaplex (OLPX) isn't a falling knife. It's a butcher's cleaver plummeting from a 30-story building. And there are still people looking up, hands outstretched, thinking they're about to grab "the opportunity."
The IPO circus
Let's rewind the tape. Late 2021. The world was still drunk on fiscal stimulus, zero interest rates, and the delusion that any company with a solid Instagram deserved to go public.
Olaplex — a hair care brand using a "bond-rebuilding" technology — debuted on the Nasdaq at $25 per share. A few months later, it hit its all-time high of $29.41. Investors were euphoric. It was supposed to be the next big thing in premium beauty.
Spoiler: it wasn't.
Today, shares trade below $1.50. That's right. A drop of nearly 95%. Meanwhile, the S&P 500 climbed more than 50% over the same period. If you put money into Olaplex at the IPO and held until now, congratulations: you turned every $100 into $5. Not even the Joker could burn cash that efficiently.
The lawsuit that blew it all up
By 2022, demand was already weakening and regulatory challenges were tightening. But the real knockout came in early 2023: a lawsuit filed by nearly 30 women accusing the brand of using ingredients that caused hair loss and damage. The ingredient in question? Lilial — a substance already banned in the European Union.
Irony of ironies: the company that promised to rebuild hair was being accused of destroying it.
Olaplex aggressively denied everything, said it had already removed lilial from its products. The case was dismissed. Legal victory, right?
Hell no.
The court of social media has no judge, no appeals process, and no statute of limitations. The reputational damage was devastating. U.S. net sales plummeted 47.8% in fiscal year 2023. Net income dropped 74.8%. And the stock? It sank more than 50% that year alone — and never recovered.
While Olaplex was bleeding, competitors were celebrating
This is the detail that CEO Amanda Baldwin's polished press release doesn't mention. While the brand was busy putting out fires, competitors like K18, Ouai, and Redken advanced mercilessly on the market share Olaplex left on the floor.
The premium hair care market didn't stop and wait for anyone. That's capitalism, baby. You snooze, you lose.
The attempted turnaround
Baldwin was recruited in late 2023 — former CEO of Supergoop — with the mission of saving the ship. The official narrative? "Olaplex is a category creator, redefining what's possible at the intersection of beauty and science."
Looks great on a PowerPoint. But what about the numbers?
In the fourth quarter of the latest earnings report, net sales rose 4.3% year-over-year, reaching $105.1 million. Sounds good? Look at the full fiscal year 2025: growth of 0.1%. Zero point one. That's not even growth — that's a rounding error.
The market reacted accordingly: shares dropped more than 20% after the earnings report.
The company recently launched a new product — a pre-shampoo treatment — trying to prove it still has the capacity for innovation. Celebrity hairstylist Tracey Cunningham, who's been with the brand since 2013, continues as its spokesperson and evangelist.
All very pretty. But as Nassim Taleb would say: show me the P&L, not the press release.
What this teaches investors
The Olaplex story is a brutal reminder of three things:
First: IPOs during euphoria windows are minefields. The majority of companies that went public in 2021 are wrecked.
Second: reputational risk is existential risk. It doesn't matter if the lawsuit was dismissed. In the age of social media, perception IS reality.
Third: a stock that's fallen 95% can fall another 95%. Cheap isn't synonymous with opportunity. Sometimes, cheap is just the fair price of garbage.
So, before you look at the ticker OLPX and think "it's way too cheap, I'm getting in" — ask yourself: are you seeing real value, or are you just hoping for a miracle?
Because miracles, my friend, are a whole different department.
