Coty Stock Glows Up with Possible Kardashian Cosmetics Line

The equity is now up 23% for the month

by Fernanda Horner

Published on Jun 3, 2020 at 11:26 AM
Updated on Jun 24, 2020 at 10:16 AM

The shares of Coty Inc. (NYSE: COTY) are up 6.5% at $4.47 this morning -- one of the best stocks on the New York Stock Exchange -- after the cosmetics company disclosed it is in talks with reality TV star Kim Kardashian West over a possible collaboration on a line of beauty products. Coty already has a majority stake in Kylie Jenner's makeup and skincare line, though the $600 million acquisition recently came under scrutiny and shares shed 13.4% on Friday, after Forbes magazine alleged Jenner overplayed the value of her cosmetics brand.

Despite the potential new line and yet another CEO change, COTY is trying to bounce back from a steep mid-May fall near to its March lows around $3. Overhead pressure is still strong at the 30-day moving average, despite news of the collaboration. Nevertheless, the shares sport a 23% month-to-date gain already. 

Additional gains could come from a short squeeze. Short interest is up 39.97% in the most recent reporting period to 28.29 million shares, the most since November. This makes up roughly 10% of the stock's available float, which could fuel more gains should pessimism begin to unwind. 

What's more, short-term traders have been targeting calls at a rapid rate, according to COTY's Schaeffer's put/call open interest ratio (SOIR) of 0.21, which sits in the low 3rd percentile of its annual range. This indicates that short-term traders have rarely been more call-biased during the past year.


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