Olaplex is trying to recover after a sharp decline since its IPO

When a hair care brand is prestige Olaplex Debuting on the Nasdaq in late 2021, it beat pricing expectations and quickly gained traction.

The company opened at $25 per share, up from initial IPO price estimates. It was part of a broader group of retailers that went public that year amid the IPO boom. Olaplex reached an all-time high a few months after its public debut, reaching a price of $29.41 on January 3, 2022.

But this run did not last long.

Since its IPO, Olaplex stock’s performance has declined dramatically, losing nearly 95% of its value. the Standard & Poor’s 500Meanwhile, it gained more than 50% during the same period. Now, the company is hoping to turn its game around.

“We are encouraged by the momentum we are seeing as we work to build a company that lives up to our advanced science, and look forward to the journey ahead,” Amanda Baldwin, CEO of CNBC, said in an exclusive statement.

Olaplex declined to comment to CNBC beyond this statement.

The company has a range of products, sold directly to consumers and professional salons, that use bond-building technology to strengthen and restore hair.

Olaplex shares began to decline due to weak demand and regulatory challenges in 2022, but some of Olaplex’s major issues stemmed from a lawsuit filed in early 2023 against the company that accused the brand of using harmful ingredients. The study included nearly 30 women who claimed the products caused hair loss and damage, citing an ingredient called Lilial.

The company has strongly denied the allegations and said it has removed the nightshade ingredient from all its products, but consumers on social media have continued to attack the brand, its formulations and alleged side effects.

Although the case was dismissed later that year, the allegations left lasting damage to the brand’s reputation. Over the course of that year, its stock price fell by more than 50% – and it never recovered. Olaplex shares now trade at less than $1.50, with a market cap of about $1 billion.

In fiscal 2023, Olaplex said its net sales fell 47.8% in the United States compared to the previous year, while its net income fell 74.8%.

Meanwhile, the hair care industry added new players who struggled with Olaplex’s declining market share. Companies like K18, Owai and Redken have crowded the playing field, gaining popularity while Olaplex has faced backlash on social media.

In late 2023, Olaplex tapped Baldwin, former CEO of beauty brand Supergoop, to lead the company and change its brand strategy.

At that time, Baldwin said she saw a “tremendous opportunity” to help the brand by deepening engagement with its customer base, creating new products and refining its press strategy.

“Olaplex is a category creator that is redefining what is possible by combining beauty and science,” Baldwin said in a statement in late 2023.

Late last month, the company launched a new product, a pre-shampoo treatment aimed at revitalizing hair, marking the company’s next step in the development of bond-building technology.

In its fourth-quarter earnings report last week, Olaplex reported a 4.3% increase in net sales compared to the fourth quarter of 2024, to $105.1 million. But for the entire fiscal year 2025, net sales rose just 0.1%. The company’s shares fell more than 20% after the report.

Olaplex hasn’t always had a lot of challenges.

Celebrity hairstylist Tracey Cunningham has been working with the brand since before it officially launched, first reaching out to Olaplex founder Dean Crystal in 2013 to start testing products.

Cunningham, who specializes in hair color, said she began testing the product on a client with red hair. By the end of the day, her mind was clear.

“I called Dean Crystal at the end of the day and said, ‘Dean, I just want to tell you something — you’ve given hairdressers superpowers. You’re going to change the game with hair color,'” she said.

Cunningham began using Olaplex on almost all of her clients at her Los Angeles salon, and found that it strengthened the hair and maintained color well. Over the course of the brand’s evolution, she said she has seen improvement in her technology and formula.

However, not all consumers have had the same experience with the brand, and it remains unclear whether Olaplex will be able to recover from its fall from grace.

Analysts from JPMorgan Chase aren’t sure Olaplex is reaching an inflection point. In a January note, analysts wrote that they held a bearish outlook for the brand.

“We believe the company will have a few tough quarters before operating on a much lower normal base with sales performance in FY25,” they wrote. “Increasing competition, overall pressure on consumers and a challenging operating backdrop are likely to remain significant headwinds over the next few months.”

But Olaplex sings a different tune.

On a third-quarter earnings call in November, Baldwin said research conducted when she first joined the company indicated that consumers viewed the brand as “effective, but cold and clinical.”

“According to our latest brand health tracker, which we introduced at the end of the quarter versus the baseline taken prior to the brand relaunch, Olaplex is now viewed as more approachable and engaging while retaining its core identity as a scientific and creative brand.”

Stable sales, product innovation and distance from the fallout from the lawsuit show encouraging signs of the company’s progress, said Susan Anderson, an analyst at Canaccord Genuity Global Capital Markets who has covered Olaplex for nearly its entire public history.

“The negatives are becoming much less,” Anderson told CNBC.

She noted that the company’s challenges were exacerbated by negative perception and an increase in competitors, but she believes customers have largely “overcome” the hair loss claims.

She added that hair and scalp health remains an interesting category in hair care.

“It’s one of the hottest beauty spots,” Anderson said. “We don’t really see this going away anytime soon, and I think it presents opportunities for Olaplex to continue to roll out new products.”

In a survey conducted in December, Canaccord found that Olaplex was the most respected hair brand for consumers ages 18 to 29.

There have been recent green shoots for the company as well. In January, reports that Olaplex had attracted a takeover bid from Germany-based Henkel sent the stock price up more than 30%.

Olaplex declined to respond to the report.

“I’ve always thought this is definitely a candidate for outside demand, and the valuation here is attractive,” Anderson said. “It’s obviously still a great brand with a loyal fan base, so I guess I’m not surprised at all.”