OLPX went public at $21 a share on Sept. 30, 2021

Olaplex Holdings Inc.(OLPX) is a scientifically driven beauty company primarily focused on manufacturing luxury haircare products for the professional haircare industry. The company’s portfolio includes products for both professional and home use, including shampoos and conditioners, and bond multipliers. The company has 100 patents. Its products are based on scientifically supported designs aimed at treating damaged hair.

Olaplex went public on the Nasdaq on Sept. 30, 2021 at $21 a share, significantly above its original range of $17-$19. The offering sold a total of 73.7 million shares, up from an initial 67 million, after the greenshoe option was exercised. The IPO raised over $1.5 billion for shareholders. The stock ended the week at $23.73 a share, giving it a valuation of more than $15 billion.

Olaplex originally filed for an initial public offering (IPO) for shares of common stock held by its two institutional shareholders on Aug. 27, 2021.

Investment funds affiliated with private equity firm Advent International, which acquired Olaplex in January 2020, owns approximately 78.9% of the combined voting power of Olaplex’s common stock. This makes Olaplex a “controlled company“, which will be exempt from certain corporate governance requirements, such as the requirement to have an independent board of directors or independent compensation committee.

Olaplex was founded by the company’s former Chief Executive Officer (CEO) Dean Christal. Christal’s mother worked as a licensed hairdresser and operated a home-based salon, and his father owned 26 beauty distribution stores, providing the son with a deep understanding of the haircare business. Christal went on to launch Olaplex in 2014, beginning with a line of just three products sold exclusively to haircare professionals. The company’s bond multiplying technology was a novel innovation in the industry, enabling hairdressers to repair damaged hair and improve haircare services offered to their clientele.

Since the initial launch, Olaplex has further developed its product line, now offering a suite of 11 different haircare products through professional, specialty retail, and direct-to-consumer (DTC) channels. The company’s focus is offering science-based products that address the treatment, maintenance, and protection of hair. Its product portfolio, supported by scores of patents, creates barriers to entry for competitors in the haircare business and related industries.

Olaplex is currently led by President, CEO, and Director JuE Wong. Wong, who has extensive experience in the beauty and consumer industries, was named CEO in January 2020. She has expertise managing fast-growing businesses. Tiffany Walden is chief operating officer (COO), chief legal officer, secretary, and director, and Eric Tiziani is the chief financial officer (CFO).

Olaplex Financials

Olaplex provided recent financial results in its second amendment to its S-1 registration form. For the quarter ended June 30, 2021, the company’s net income rose nearly twenty-five times to $49.4 million compared to the same period a year ago. Net sales increased 175.3% year over year (YOY) to $152.1 million. For all of 2020, net income sank 35.5% despite revenue growth of 90.4%. Large interest expenses hurt Olaplex’s earnings.

The company’s operations and financial results were also affected by the COVID-19 pandemic. The outbreak of the coronavirus in early 2020 disrupted Olaplex’s retail stores, hair salons, manufacturing, and distribution. Many salons were required to close or operate at reduced capacity, which triggered a shift in demand from the company’s professional sales channel to its specialty retail and DTC channels. Olaplex said it has not experienced a decline in demand from DTC channels even as restrictions have eased and salons have begun returning to more normal capacity.

Olaplex’s total book value, the difference between its assets and liabilities, as of June 30, 2021, was $627.4 million. Total cash and cash equivalents on the company’s balance sheet at the end of the period were $76.4 million, which is up nearly seven times compared to the end of 2020.

^{Source: Olaplex S-1 (Amendement No. 2)}

How Much is Olaplex Worth?

In June 2021, Bloomberg reported that Advent was exploring options to sell Olaplex and was targeting a valuation of at least $1.5 billion. Advent finalized its ownership of Olaplex in early 2020, but the financial details of that transaction were not disclosed. Advent owns 89.3% of Olaplex’s outstanding shares. The other institutional shareholder, private equity firm Mousse Partners, owns 6.8%.

After its IPO Olaplex’s valuation stands at just over $15 billion as of Oct. 1, 2021.

Olaplex Key Competitors

The size of the global haircare market is expected to grow from an estimated $92.5 billion in 2020 to $105.1 billion in 2025. Olaplex faces a number of big rivals including France-based L’Oreal S.A. (OR.PA), U.K.-based Unilever PLC (ULVR), Germany-based Henkel AG & Co. KGaA (HEN3), and Japan-based Kao Corp. (KAO). Olaplex also competes with smaller, independent brands and some of the company’s competitors have ownership interests in retailers that are its customers.

The Bottom Line

Luxury haircare company Olaplex went public on the Nasdaq on Sept. 30, 2021. Its IPO price wad $21, significantly above the expected $17-$19 range and as of Oct. 1, 2021, its valuation stands at more than $15 billion.