Shares of skincare company BeautyHealth (NASDAQ:SKIN) fell 36.1% in the morning session after the company reported third quarter results with revenue, EBITDA, and EPS falling below Wall Street's estimates. It also lowered its full-year guidance for virtually every metric we track. Furthermore, the company observed a negative gross margin this quarter, driven by $63 million in restructuring charges related to device upgrades of its early generation Syndeo product - its versions 1 and 2 experienced quality issues and were marked as obsolete, resulting in a one-time impairment to its inventory/cost of goods sold. Following the results, the company noted that CEO Andrew Stanleick will depart on November 19, 2023. Overall, this was a terrible quarter for Beauty Health and the stock move is suggesting there could be concerns about the long-term viability and existence of the business.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy BeautyHealth? Access our full analysis report here, it's free.
What is the market telling us:
BeautyHealth's shares are very volatile and over the last year have had 41 moves greater than 5%. But moves this big are very rare even for BeautyHealth and that is indicating to us that this news had a significant impact on the market's perception of the business.
BeautyHealth is down 82.9% since the beginning of the year, and at $1.58 per share it is trading 88.5% below its 52-week high of $13.70 from April 2023.
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