The producer of nail polish Revlon Inc (REV.N) kept on its ascent as the newest “meme company” riding a wave of interest from retail investors as the stock increased by more than 50% in brisk trade on Wednesday.
Shares of the $330 million market-cap firm have increased by more than 400 percent from their lows on June 14 as ordinary investors appear to be buying up the stock. The company filed for bankruptcy last Wednesday.
Following only the shares of Tesla Inc (TSLA.O), Revlon shares were overall the second-most traded by brokerage clients of Fidelity on Wednesday.
Before its current spike, the company’s market size was less than $100 million, which, in the words of Vanda Research, made it “the perfect option for the most speculative retail cohort.” Tuesday saw the highest-ever volume of retail traders purchasing Revlon stock at $8.3 million, according to Vanda.
The stock increased by more than 50% early in the day and was up more than 48 percent at $8.98 by late afternoon trading on Wednesday.
The rally brought to mind the more than 500 percent increase in the share price of the car rental company Hertz Corp. after that company declared bankruptcy in May 2020 due to financial difficulties brought on by the early stages of the coronavirus pandemic.
Revlon is a desirable target for retail traders who have previously piled into stocks in an effort to force a short squeeze, which is an unwinding of bearish bets that happens when a stock price rapidly rises and can amplify gains in a company’s shares. Vanda estimated that short interest in Revlon stood at 37.6 percent earlier this week.
Ihor Dusaniwsky, managing director at research company S3 Partners, noted that such an unwind is probably not what caused Revlon to rise higher recently.
He said that a meme stock was to blame for the recent price changes, which were caused by long buying and selling rather than short selling and covering.
For the month of June, short sellers saw mark-to-market losses of $15.3 million, or a 139 percent decline.