Kylie Jenner Sells 50% of Kylie Cosmetics: Stock Crashes to a New Low
Coty purchased half of Kylie Jenner’s company Kylie Cosmetics but instead of going up, stock prices have crashed. After acquiring Kylie Cosmetics, Coty’s stock climbed to $12.22 but soon the stock plummeted to $11.53 per share in November 2019. The 22-year old Kylie received a reported $600 million for surrendering a 51 percent controlling interest in the cosmetic company.
Coty had praised Kylie Cosmetics for its fantastic growth potentials as also its strong products line. A deal of this magnitude means all financial records of Kylie Cosmetics were duly vetted prior to the actual transfer transaction with no red flags raised. As the youngest of the Kardashian-Jenner brood, the mogul struggled to find something to do on her own but her childhood inspired her empire. Wearing purple eye shadow since the sixth-grade, she turned to makeup to gain confidence. Soon, her siblings consulted her for advice about what’s cool, holding in high esteem, Jenner’s opinion.
The Kylie Effect
Has the “Kylie Effect” officially ended? In February 2018, Jenner tweeted her disappointment about changes in her Snapchat account and in under 24 hours, the social media company lost $1 billion in revenue. Market watchers and even the Wall Street were quick to name this phenomenon “the Kylie Effect” and even attributed Snapchat’s downfall on that one tweet. Later, Forbes named Kylie the youngest billionaire, self-made billionaire, no less. The publication even gave Kylie Cosmetics a valuation of around $900 million, further fuelling the myth that everything that the young entrepreneur touches, turns to solid gold. When the Coty deal finally came around, it appeared as a win-win situation for all involved including Kylie Cosmetics.
Down but Not Out
While shocked at Coty’s plummeting stock after the deal with Kylie Cosmetics, Jenner cannot be written off as Coty owns other companies possibly contributing to the dip in stock value. Stakeholders may have just assumed that Kylie knew something they did not and cashed out while they could but Kylie looked forward to a strategic partnership with Coty to make the world-famous beauty brand even more powerful. Coty’s current roster includes CoverGirl, Clairol, Rimmel, and OPI, among other prominent beauty brands and will boost distribution and infrastructure. Kylie is unaffected by the sale which supports her growing business and she has been earning and working since long. This influx of money will not change her life or lifestyle, unlike other enterprise founders who make very little profit before a bumper sale like this. Maybe the Kylie Effect proved just too strong and unsuspecting Coty fell victim to it.
As Jenner and sister Kim Kardashian succeed with their own businesses, they help each other and often collaborate and share advice about their brands. The Skims founder praised her sister’s accomplishments and dismissed competition between sisters and she was proud about her creating an amazing business for herself. Kylie sold only part of the business and continues to be involved as the creative director and founder. A Coty press release about the partnership affirms that Kylie and her team will lead creative efforts for product and communications initiatives, while building her global reach capabilities through social media. There’s no animosity over Kylie’s success just immense pride. With Jenner focused on her next venture, Kardashian’s agenda includes her highly awaited make up collection, in collaboration with Mario Dedivanovic and her new Skims launches.
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