Why Shares of Olaplex Soared This Week

Core Insights - Olaplex shares have increased by 16% this week and 32% since the earnings report on August 6, indicating positive market sentiment towards the company [1][2] - The recent surge in share price is primarily attributed to executive chairman John Bilbrey's purchase of nearly $400,000 worth of Olaplex stock, marking the first insider buy in over a year [2] - Despite a significant 35% decline in sales in 2023 due to inventory issues among retail customers, Olaplex has shown sequential sales growth in its most recent quarter and leads in the prestige hair products market [3][4] Financial Performance - Olaplex generated $159 million in free cash flow and $48 million in net income over the past year, suggesting strong financial health despite recent challenges [4] - The current share price of approximately $2.40, down from over $20 at its IPO in 2021, positions Olaplex closer to a penny stock, but its profitability and market leadership argue against this classification [3][4] Investment Considerations - The combination of Olaplex's profitability, market leadership, and recent insider buying makes it a company worth monitoring, especially as it trades at just 10 times free cash flow [5]