REV Stock is Worthless via /r/wallstreetbets #stocks #wallstreetbets #investing


REV Stock is Worthless

Revlon is worthless. That might seem impossible to you as they are one of the most well-known brands in the beauty industry, however there is no value for shareholders. All the value that’s left in the company will not go to shareholders but will go to bond holders and other creditors. Even after the company’s substantial rise over the last week its market cap is still ‘only’ $440 million. Nevertheless, its enterprise value (the cost a buyer would pay to purchase the company) is about $4 billion! and that doesn’t even include the bankruptcy loan they just got for up to $1.4 billion. I’m going to keep it really simple for you guys, their interest expense > operating income. This means even if their operations continue all their profits will go straight to bondholders and not shareholders. This company will NEVER be able to pay off its debt as they only have 70 million in cash and can’t generate profits with their business. The value of the stock is truly worth $0 and while it may take months to get there, it eventually will. Let me tell you exactly what’s going to happen, in bankruptcy court it will be revealed what we already know that their business is not profitable and they will never be able to pay their creditors. Taking on more debt to pay their current debt is not a long-term solution and is very impracticable since their bond yields are so astronomically high. Once that’s done the bondholders will take control of the company and the stock will be delisted from the NASDAQ. The bondholders can do one of two things, they can auction off the assets to try and get something back, which would probably be smart since Revlon has some brand recognition. Or they can restructure the company, eat their losses, and re-list the stock sometime next year with new investors. Either way, stockholders will get $0.

Submitted August 03, 2022 at 07:50PM by scoopwhooppoop
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