Olaplex tries to recover after a drastic fall since its IPO

When a prestigious hair care brand Olaplex debuted on the Nasdaq in late 2021, it beat price forecasts and quickly gained momentum.

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

But this run didn’t last long.

Since its IPO, Olaplex’s stock performance has fallen drastically, losing almost 95% of its value. THE S&P500meanwhile, gained more than 50% over the same period. The company now hopes to improve its performance.

“We are encouraged by the momentum we are seeing as we work to build a company that matches our scientific advancements, and we look forward to the journey ahead,” CEO Amanda Baldwin told CNBC in an exclusive statement.

Olaplex declined to comment to CNBC beyond this statement.

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

Its stock began to decline due to weakening demand and regulatory challenges in 2022, but some of Olaplex’s main problems stem from a lawsuit filed in early 2023 against the company that accused the brand of using harmful ingredients. The investigation involved nearly 30 women who alleged the products caused hair loss and damage, citing an ingredient called lilial.

The company aggressively denied the allegations 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 alleged side effects.

Although the case was dismissed later that year, the allegations caused lasting damage to the brand’s reputation. During that year, its shares fell more than 50% – and they never recovered. Olaplex shares now trade for less than $1.50, with a market cap of around $1 billion.

In fiscal 2023, Olaplex said its net sales declined 47.8% in the United States from a year earlier, while its net profit fell 74.8%.

Meanwhile, the hair care industry added new players who fought for Olaplex’s declining market share. Companies like K18, Ouai, and Redken took over 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 lead the company and turn around its brand strategy.

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

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

Late last month, the company launched a new product, a pre-shampoo treatment intended to condition hair, which marked the company’s next foray into advancing its bonding technology.

In its fourth-quarter earnings report last week, Olaplex reported a 4.3% increase in net sales compared to the fourth quarter of 2024, to $105.1 million. But for the full fiscal year 2025, net sales rose just 0.1%. The company’s shares fell more than 20% after the report was released.

Olaplex hasn’t always had this many challenges.

Celebrity hairstylist Tracey Cunningham is part of the brand ahead of its official launch. She first contacted Olaplex founder Dean Christal in 2013 to begin testing the products.

Cunningham, who specializes in hair coloring, said she began by testing the product on a client with red hair. At the end of the day, his opinion was clear.

“I called Dean Christal at the end of the day and said, ‘Dean, I just want to tell you something: You just gave colorists superpowers. You’re going to be a game changer with hair coloring,'” she said.

Cunningham began using Olaplex on virtually all of her clients at her Los Angeles salon, finding that it strengthened the hair and retained color well. As the brand has evolved, she said she has seen its technology and formula improve.

Still, not all consumers have had the same experience with the brand, and it remains unclear whether Olaplex will be able to bounce back from its fall from grace.

JPMorgan Chase analysts aren’t sure Olaplex has reached an inflection point. In a January note, analysts wrote that they had a bearish outlook for the brand.

“We believe the company will face a few challenging quarters ahead operating on a significantly lower normalized basis with sales performance in FY25,” they wrote. “Increased competition, generally stressed consumers and a difficult operating environment will likely remain significant headwinds over the coming months.”

But Olaplex sings another tone.

During a third-quarter earnings conference call in November, Baldwin said research conducted when she first joined the company indicated the brand was seen by consumers as “effective, but cold and clinical.”

“According to the latest brand health tracker, which we conducted at the end of the quarter against a baseline taken before the brand relaunch, Olaplex is now perceived as more approachable and engaging, while retaining its core identity as a scientific and iconic brand,” she said.

Susan Anderson, an analyst at Canaccord Genuity Global Capital Markets who has covered Olaplex for almost its entire public history, said stabilizing sales, product innovation and the move away from fallout from the lawsuit show encouraging signs for the company’s progress.

“The negatives are just diminishing,” Anderson told CNBC.

She noted that the company’s challenges have been compounded by negative perception and growing competition, but she believes customers have largely “outgrown” the hair loss claims.

And hair and scalp health continue to be a hot category in hair care, she added.

“It’s one of the hottest areas of beauty,” Anderson said. “We don’t really expect this to go away anytime soon, and I think this presents opportunities for Olaplex to continue to roll out new products.”

In a December survey, Canaccord found that Olaplex was the most prestigious prestige hair brand among consumers aged 18-29.

There have also been some recent green shoots for the company. In January, reports that Olaplex had attracted a buyout offer from German company Henkel sent the stock soaring more than 30%.

Olaplex declined to respond to the report.

“I always thought this was definitely a takeout candidate with the valuation here being attractive,” Anderson said. “Obviously it’s still a big brand that has a loyal following, so I guess I wasn’t surprised at all.”