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Coty’s Stock: Will It Rebound After a 4% Slip?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs

Coty Inc.’s stock is under pressure due to uncertainties around their financial maneuvers and potential production setbacks, as highlighted by recent news about their quarterly earnings outlook. On Tuesday, Coty Inc.’s stocks have been trading down by -10.74 percent.

Recent Developments in Coty’s Market

  • Following a Q1 financial report, Coty saw its shares dip 4% after hours. The company reported a 4-5% sales increase, below original projections of 6%, with anticipated lower adjusted EBITDA.
  • Citi has reduced Coty’s price target from $10.50 to $10, maintaining a Neutral rating, predicting a U.S. market slowdown in sales and pricing growth.

Candlestick Chart

Live Update at 10:37:35 EST: On Tuesday, October 15, 2024 Coty Inc. stock [NYSE: COTY] is trending down by -10.74%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Financial Insights and Earnings Overview

In digging through Coty’s latest earnings and key financial figures, it’s clear that the market is showing signs of apprehension. The company’s sales climbed between 4-5%, which, albeit positive, slid short of its enthusiastic 6% growth target. Given this backdrop, Citi’s decision to lower its price target from $10.50 to $10 is somewhat telling. One might parallel this adjustment to a cautious driver gently tapping the brakes when spotting a patch of ice on the road ahead.

Drilling deeper, Coty’s gross margin showcased some expansion, a glimmer of good news in a sky clouded by less impressive earnings. In forecasting, Coty expects its adjusted EBITDA for the next quarter to range from flat to slightly lower; not quite the jolt of optimism investors prefer. However, the fragrance leader hasn’t lost its scent entirely—it anticipates moderate sales growth in Q2 and a more robust acceleration in the latter half of fiscal 2025, where adjusted EBITDA is projected to rise by 9% to 11%.

When glancing over at the ticker, one notes that on Oct 14, 2024, Coty’s stock closed at $9.17 before faltering to $8.185 the following day—an echo of market sentiment sobering up to the less-than-glowing earnings report.

Performance Metrics and Market Sentiment

The scene with Coty is reminiscent of a firefighter dance pause—the music plays, but the pace is cautious. With a substantial gross margin of 64.4% and earnings ratio standing at 104.44, there looms a faint whisper of potential overvaluation. Total debt to equity is 1.08, illustrating leverage that appears navigated but bears watching like a restless sleeper.

More Breaking News

Coty’s revenue stands at about $6.1B, illustrating a modest but essential lifeline in keeping the company afloat. Yet, with ongoing high depreciation and amortization costs—$119.4M recorded—this symbolizes a relic of past endeavors taxing current revenues. The balance sheet reveals notable goodwill and intangible assets covering about $7.47B, critical factors underpinning Coty’s market value but casting shadows in shaping tangible income growth.

Key Takeaway From the News: Expectations and Market Predictions

The underlying market signals that circulated around Coty’s latest business narrative point toward a rollercoaster rhythm, with investors carrying both curiosity and precaution akin to examining the weather forecast before an outdoor event. Should Coty deliver on its H2 projected upward curve, there remains potential for a revitalized stock price, but until then, it’s prudent to tread softly, acknowledging the financial landscape’s rigorous demands. How Coty maneuvers through this chapter, with wary investors eyeing both past and future strategies, will indeed weigh heavily on the direction of their shares.

Conclusion

The recent news bulletins expose an array of elements contributing to Coty’s current price fluctuation, illustrating a blend of factual financial reports to nuanced speculations from Citi. Bearing in mind Coty’s attempt at a financial crescendo this fiscal year, its shareholder base ponders if the curtains will open to applause or a momentary pause in an act of anticipation. With these considerations painted clearly, Coty stands before the stage, ready or anxious, awaiting its next move amidst cautious yet hopeful onlookers.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”