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This bankrupt company has returned 460% in 8 days and is going higher

Cosmetics giant Revlon Inc. (NYSE:REV) touched a record low of around $1.22 on June 13. On June 15, the company filed for bankruptcy protection. Since the Chapter 11 filing, the stock has gained more than 460%.

The stock touched a high of $6.90 on June 21, after closing up more than 62%. At press time, the stock was trading at $9.04, up 45%. What is fueling the surge?

We find no important fundamentals driving the jump in Revlon stock. At a time when the stock market is depressed, investors could be looking for quick returns.

We found that Revlon was under the radar of retail traders. Significant social media mentions are fueling the heavy trading volumes, pushing the stock higher.

Revlon technical analysis as MAs join support

Source – TradingView

Technically, Revlon is trading higher, with a potential resistance at $10. The 50-day and 100-day have joined support after the significant price jump. However, these technical pointers are insignificant since the stock is driven by a retail frenzy.

We cannot tell with certainty if the stock will reverse or surpass the potential resistance. However, what we are sure of is that the stock is not driven by any fundamentals. As a result, a potential crash can be drastic, wiping out all the gains. 

Concluding thoughts

Although investors can make robust returns trading Revlon’s momentum, it is a highly risky stock. Investors should watch out and monitor the stock before getting into a bull trap. The company is already under bankruptcy, meaning it lacks any fundamentals. We do not encourage buy-and-hold.

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