A drop in the share price of Adore Beauty has wiped out millions of investors’ money despite the company’s chief executive assuring that sales will pick up.
The stock price of the online beauty retailer closed at $2.48 on Tuesday, which left most investors underwater since it floated in October 2020.
The company’s revenue growth slowed to 14 per cent in the first half of 2022, as it spent heavily on marketing to attract new customers.
After-market analysts lowered their second-half sales growth expectations for Adore Beauty. The company’s share price fell almost 8 per cent.
During the company’s earnings call, Adore Beauty did not provide a firm profit guidance for the second half and said that they expected the weaker sentiment to be temporary.
During the call, O’Neilly noted that the company’s promotional events during March and May would help boost sales and retention.
The company, which carries more than 200 global beauty brands, said it benefited from the success of its promotional events.
After reaching a high of almost $2.89, the stock immediately ended the day at a record low of $2.50.
A trader noted that the sudden drop in the share price might have been caused by investors reassessing the company’s growth potential.
Despite the company’s profit miss, Adore was still profitable and would still grow at a rate of around 30 to 50 per cent annually.
It has been a rocky year for the company since its IPO. Justin Ryan, its former chairman, left the company to start a new private equity firm with Kate Morris, the founder of Adore.
The company is also looking to expand its reach in Australia’s beauty and personal care market, which is valued at over $1 billion.
Revenue grew 18 per cent in the first half of the year, largely due to the return of customers. The average order value also increased by almost 5 per cent.
The company’s sales grew at a slower pace in the second quarter, as it continued to shift its focus to online.
To get a great deal at Adore Beauty, use an Adore Beauty coupon code to save on your purchase.