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Are you sitting pretty? Revlon shares rise after bankruptcy

Shares of Revlon (FOX) rose almost 35% on Wednesday afternoon in volatile trading. The stock is now up more than 300% in just the last three sessions – from around $ 2 to around $ 8 – after falling 13% on the day the company announced its Chapter 11 reorganization plan. (Talk about putting lipstick on a pig …)
Revlon’s rise in stocks is eerily reminiscent of what happened to the rental car company Hertz (CNTB) in 2020 after it filed for bankruptcy. The shares initially rose in part thanks to positive reviews from traders on Reddit, who targeted short sellers who thought the Hertz share would continue to fall further.
When a company goes bankrupt, most investors usually do not get anything from the subsequent reorganization. Bondholders and other creditors are often first in line to get some of their money back, but stock owners usually get their investments canceled when new shares are issued after bankruptcy.
Which makes the increase in Revlon all the more distinctive. Some posters on Reddit’s popular WallStreetBets board even speculated about how much higher Revlon shares could go.

A Reddit user named pikatruuu (like the yellow Pok√©mon character) noted the comparison with Hertz, saying the rental car giant’s shares rose eightfold during the bankruptcy process.

“Revlon is currently the 11th most shorted stock … It’s a pretty iconic brand. Is there a chance it will be a meme stock?” wrote pikatruuu. Then again, pikatruuu also pointed out that what happened to Hertz “of course is a rare occasion.”

This has not stopped any extremely enthusiastic users from pumping up the stock’s prospects.

“Is Revlon Gamestop of 2022?” asked wonderwoman009.

“No idea. But the party is happening now,” replied pikartruuu, adding that “if this [subreddit] can hop on the train, I do not understand why it does not go over $ 10. “

Others were even more bullish, expressing their love for the stock with posts in ALL CAPS.

“REVLON TO THE MOON GOES TO $ 12,” said a user named One-Relationship-143.

But there seemed to be at least one sensible voice discussing Revlon on Reddit.

“If you had money, you would just burn for something to do,” Electronic-Ad6420 wrote, “so yes, you should buy some.”

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