Lather, rinse, repeat
Sometimes it hurts to be pretty
Good morning, my dashing dandies. This is your Stock Market Rundown for August 23rd, 2023. Thanks for tuning in on this fine Wednesday. Let’s dig in:
TODAY’S TOP STORY: THE BALD REALITY OF BEAUTY 🧴
Many investors are lured by the beauty industry’s sexy margins. The problem is, vendors of cosmetics and personal care products face ugly competition, due to low barriers to entry.
I mean, it’s shampoo… we’re not curing cancer here. There isn’t much real innovation, so brand is the sole source of differentiation. And brand appeal can fade like yesterday’s bottle blonde.
Example: back in 2021, hairdressers were obsessed with Olaplex, a line of hair-care products with a patented ingredient that repairs damaged tresses. The brand went public at a $16B valuation, with private-equity insiders dumping their shares on the eager investing public. Olaplex became the #1 hair brand at Sephora, the mecca of unbelievably overpriced shit in cute sparkly packaging.
But since then, sales have fallen by half, and the stock has taken a haircut—it’s down 85%. The problems started when competitors like L’Oreal and Unilever brought out their own bond-building products. Turns out the “patented ingredient” wasn’t exactly rocket surgery.
Then, a lawsuit by Olaplex users charged that its products caused “hair loss, breakage, bald spots, and scalp irritation”. It’s tough to believe a hair-product company would sell something that makes your hair fall out—clearly, it’d be negative for business if customers are going bald—but the media coverage killed Olaplex’s reputation.
Lesson: be careful about investing in one-trick-pony companies. Olaplex only had one “magic ingredient”, and when the frenzy faded, public shareholders were left holding the bag. Head and Shoulders would never let us down like this.
SO WHAT ELSE IS GOING ON?
If you like intimate conversations with ChatGPT, you’ll love this: Match Group says it will add artificial intelligence to the Tinder dating app. The proposed feature will scan your photo album and help you select the most appealing pic (no AI-generated catfishing, please).
Hey, remember Bitcoin? The OG crypto asset’s price volatility is at a five-year low because nobody cares about it anymore. God, give us one more crypto rally—we promise not to blow it this time.
Hottest fashion item among the organized crime set? Air Jordans. The WSJ reports that millions of dollars’ worth of Nike products have been stolen in recent months. With limited-edition kicks as scarce as Fabergé eggs, thieves can multiply their profits. Please, folks, don’t buy sneakers from anybody you meet in a dark alley.
Due to an undersupply of workers, four in ten Japanese companies hired people over 70 last year. Low birth rates could bring this trend to North America in coming decades. If grandma needs bingo money, maybe she can learn to code.
That’s all for aujourd’hui; see you bright and early tomorrow. Yours in capitalism, The Axe