After asset management Morgan Stanley (NYSE:MS) disclosed in a filing that it had bought 400,650 shares in the firm during the course of the previous quarter, shares of insolvent cosmetics giant Revlon Inc. (NYSE:REV) skyrocketed by over 27% on Monday.
During the second quarter, the New York-based banking behemoth reported that it had purchased more than 400,000 shares of the stock held by the defunct cosmetics shop cum-meme. Although the firm had filed for Chapter 11 bankruptcy at the beginning of the quarter, the significant stake expanded its position by approximately 1,800%.
Revlon’s Shares Increase
Revlon’s (NYSE:REV) share price has increased by 582% since it hit a low point in the middle of June. Investors are optimistic that the company will be able to replicate the success of shareholders in the car rental company Hertz, who were handsomely rewarded when Hertz was saved from bankruptcy by a group of investors.
AMC Entertainment Holdings Inc. (NYSE:AMC) and GameStop Corp. (NYSE:GME), two other so-called meme stocks that are popular with retail investors and which took a significant knock in the first half of the year, have also seen their share prices increase recently, coinciding with Revlon’s comeback.
In its Chapter 11 bankruptcy petition, Revlon (NYSE:REV) said that the company’s significant debt load left it with insufficient cash to make on-time payments to its suppliers. The company filed for bankruptcy under Chapter 11 in June. On August 1, the firm was granted clearance for a bankruptcy loan for $1.4 billion over objections from its official creditor’s committee. In a court statement, the official creditor’s committee described the company as a “mess.”
On Monday, Revlon stock began to move closer to its previous highs after the bankruptcy, more than making up for the losses sustained during the previous week’s drop. Revlon shares have increased by around 600% from the low established right before bankruptcy, helped by many causes, including a short squeeze and debt refinancing, which has attracted the attention of meme stock traders who jumped on earlier insolvent vehicle rental business Hertz.
Despite the recent upswing, Revlon’s (NYSE:REV) share price is still 30% lower than at the beginning of the year.
Featured Image: Megapixl @Romaset
Author Shariq Khan 
