Why Coty Stock broke today
Actions of Coty (NYSE: COTY) climbed today while the beaten cosmetics stock benefited from market rotation. In recent sessions, investors have shifted away from stocks that performed well during the coronavirus crisis, particularly home games, and stocks that fell sharply during the pandemic but are expected to recover as the economy reopens. .
As a struggling cosmetics seller before the pandemic and has seen sales plummet since, Coty has benefited from the change in sentiment.
As of 3:00 p.m. EDT, the stock was up 21.4%.
There was no specific news on Coty today, but the stock has risen over the past week, gaining nearly 50% since June 2 after the company struck a deal with KKR to secure much needed financing, and how it has benefited from the economic reopening and changing sentiment among investors.
Coty, which saw its sales drop 23% in its most recent quarter due to the pandemic, has formed a strategic partnership with KKR, which included KKR’s direct investment of $ 1 billion in convertible debt bearing 9% interest. Additionally, KKR is taking a 60% stake in Coty’s professional hairstyling and retail businesses, in which Coty will receive $ 2.5 billion in net proceeds from the deal.
The company is expected to use this influx of cash to reduce its $ 9.2 billion in debt and invest in its other businesses.
As a cosmetics company, Coty has a vested interest in economic re-openings around the world, as consumers are likely to purchase more makeup and cosmetics when they return to the office, and go out on appointments again. you and at social events. While the recovery to normal social behavior is likely to be gradual, the stock is still down 45% from pre-pandemic levels and is expected to respond favorably to positive economic data and as the recovery takes shape. .
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