NOTE: This article was originally posted at 11:30 a.m. and updated after the markets closed at 1 p.m. PDT to reflect Olaplex’s closing price.
The Montecito-based hair care products company Olaplex’s stock began trading on the Nasdaq on Sept. 30, opening at $21 and shooting up to $24.50 by the end of the trading day.
Shares were up 20% in the company’s first few hours of trading under the symbol OLPX and closed up 17% for the day. At the opening price of $21 per share, Olaplex’s shareholders generated almost $1.6 billion in the IPO. The company’s market capitalization was nearly $15.9 billion at the end of the trading day, making it the fourth largest publicly traded firm in the tri-county region.
The only shares sold in the IPO were those owned by Olaplex’s existing shareholders. The private equity firm Advent International is Olaplex’s current majority owner, with 79.6% of the company after the IPO, according to Olaplex’s filings with the U.S. Securities and Exchange Commission.
Before the IPO, Advent owned 89.3% of Olaplex. Advent bought the company from its founders in Santa Barbara in 2019, for an undisclosed price.
Olaplex’s IPO raised hundreds of millions more for Advent and the other sellers than the company had originally anticipated. On Sept. 28, Olaplex announced plans to price its IPO at $17 to $19, an increase from its earlier estimate of $14 to $16. The company also announced on Sept. 29 that it would sell 7.7 million more shares than its original estimate of 67 million.
Between the higher opening price and the increase in shares, the expected value of the IPO grew by more than $500 million during the week before the offering.
In addition to the 74.7 million shares offered to the public, the underwriters of the IPO have an option to buy another 10 million shares.
Goldman Sachs, J.P. Morgan, Morgan Stanley and Barclays are acting as joint lead book-running managers for the offering. B of A Securities, Evercore ISI, Jefferies and Raymond James are also acting as joint book-running managers. Cowen, Piper Sandler, Truist Securities, Telsey Advisory Group, Drexel Hamilton and Loop Capital Markets are acting as co-managers.
Olaplex’s staff works fully remotely, and the company had a remote operation before the COVID-19 pandemic, so it does not have a physical headquarters. Its address on SEC filings is on Coast Village Road in Montecito.
Olaplex has 82 employees, as of a June 30 SEC filing. Its revenue in 2020 was $282.3 million, a 90% increase from the year before.
The company is profitable, with a net income of $39.3 million in 2020, down from $60.9 million in 2019. Its adjusted net income increased from $100.5 million in 2019 to $131.1 million in 2020, according to its SEC filings.
Olaplex sells its products both to professional hair stylists and to consumers, primarily through retailers such as Amazon and Sephora. In 2020, a majority of its sales came through professional salon distributors.
Olaplex was founded in 2014 by Dean and Darcy Christal of Santa Barbara. UC Santa Barbara chemistry professor Craig Hawker and his former graduate student, Eric Pressly, developed the technology for the company’s hair care products.
The company’s founders include Hawker and Pressly, according to Sherylle Mills Englander, the director of UCSB’s Office of Technology & Industry Alliances.
“We are immensely proud of both of them and of Olaplex’s success,” Mills Englander told the Business Times via email. She would not disclose whether the university has had any business relationship with Olaplex or receives any licensing fees from the use of its technology, as UCSB keeps the identity of its licensees confidential.