After billionaire Ron Perelman’s prized cosmetics company Revlon filed for bankruptcy protection last week, something bizarre happened: Its stock surged over 200%, swiftly adding nearly $200 million to his fortune.
It was an unexpected turn of events for the famed dealmaker, who made billions as a corporate raider by amassing holdings in everything from candy to cars to makeup, but has fallen on hard times lately. (Perelman, who was once worth more than $14 billion, failed to qualify for The Forbes 400 list of the richest Americans last fall.)
So why did the stock rocket higher? Perhaps the best explanation is that it has become the latest meme stock, a phenomenon in which investors on Reddit identify a stock that has been heavily targeted by short sellers (who are betting the stock will fall) and then take pleasure in piling into it and cause short sellers to lose money. Some 37% of Revlon’s available shares are owned by short sellers.
The stock, which closed at $1.95 the day after the company filed for bankruptcy last week, quickly soared as high as $9.89 on Wednesday. By Thursday, it had given up some of its gains, but still closed at $7.20.
That provided an unanticipated boost to Perelman, 79, who is the largest shareholder of Revlon, with 85% ownership, according to regulatory filings. Perelman’s stake in the company, worth just $68 million last week, is now worth $250 million.
(This calculation puts his stake at 34.6 million shares, lower than the 46.2 million shares that appear in filings, because some of those shares are pledged as collateral. In an effort to be conservative regarding Perelman’s wealth, Forbes has deducted those shares from his holding.)
Revlon’s stock has lost two-thirds of its value since 2019, as it has struggled to compete with makeup brands from celebrities like Kylie Jenner and Rihanna. The company is also burdened by a mountain of debt. Perelman’s stake in Revlon is now a small part of his fortune, which Forbes estimates at $2.8 billion. He also owns stakes in other companies, plus an extensive collection of art and real estate.
The bankruptcy filing was the latest blow for Perelman. Last year, Princeton University said it would no longer name a dorm after him after he failed to meet agreed-upon payments for a $65 million donation. He has also been selling off assets, including a jet, a yacht and a townhouse on Manhattan’s Upper East Side. He recently sold his stakes in AM General, which makes Humvees, and Whole Earth Brands, which makes Equal sweetener.
His daughter, Debra Perelman, remains chief executive officer at Revlon, a position she’s held since 2018.