What Happened?
Shares of beauty products company Coty (NYSE: COTY) jumped 8.1% in the morning session after a company disclosure revealed that CEO Sue Nabi purchased $1 million worth of its stock.
According to a filing, Nabi acquired 260,000 shares on August 22. This purchase came just one day after the stock had plummeted to a new low following a disappointing quarterly report. The report on August 21 included a surprise adjusted loss and a wider-than-expected revenue decline, causing the stock to fall significantly. Such a substantial purchase by a top executive, particularly after a period of negative performance, is often interpreted by investors as a strong signal of confidence in the company's future prospects, suggesting leadership believes the stock is undervalued.
Is now the time to buy Coty? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Coty’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock dropped 19.4% on the news that the company reported a surprise loss for its second quarter as key profitability metrics declined. The beauty products company posted an adjusted loss of $0.05 per share for its second quarter, missing Wall Street's expectation for a $0.02 profit. While revenue of $1.25 billion topped analyst estimates, it still represented an 8.1% decline year-over-year. Furthermore, the company's operating margin decreased to 1.2% from 2.5% in the same period last year, and it burned through $131.8 million in cash. Organic revenue, which removes the effects of currency fluctuations and acquisitions, also fell by 9% year-over-year. Looking ahead, analysts expect revenue to remain flat over the next 12 months, an underwhelming projection that suggests demand challenges may persist. Overall, the surprise loss and weakening profitability metrics overshadowed the revenue beat, disappointing investors.
Coty is down 41.6% since the beginning of the year, and at $4.01 per share, it is trading 58.1% below its 52-week high of $9.55 from August 2024. Investors who bought $1,000 worth of Coty’s shares 5 years ago would now be looking at an investment worth $1,131.
Do you want to know what moves the business you care about? Add them to your StockStory watchlist and every time a stock significantly moves, we provide you with a timely explanation straight to your inbox. It’s free and will only take you a second.
