To The Moon

Coty (COTY) has been quietly sitting on my watchlist, but until today, I hadn’t really paid attention to its stock price. That changed when it suddenly jumped to the top of my watchlist for largest percentage decline, currently down a little over 20%. Naturally, curiosity got the better of me, and I decided to take a closer look at what this company actually does.

Coty (COTY)

What Coty Does

I referred to Tiger Brokers’ company profile to understand what Coty does.

According to the company profile provided by Tiger Brokers:

“Coty Inc., together with its subsidiaries, manufactures, markets, distributes, and sells beauty products worldwide. It operates through Prestige and Consumer Beauty segments. The company provides fragrance, color cosmetics, and skin and body care products. It offers Prestige segment products primarily through prestige retailers, including perfumeries, department stores, e-retailers, direct-to-consumer websites, and duty-free shops under the Burberry, Calvin Klein, Chloe, Davidoff, Escada, Gucci, Hugo Boss, Infiniment Coty Paris, Jil Sander, Joop!, Kylie Jenner, Lancaster, Marc Jacobs, Miu Miu, Orveda, philosophy, SKKN BY KIM, and Tiffany & Co. brands. The company provides Consumer Beauty segment products primarily through hypermarkets, supermarkets, drug stores, pharmacies, mid-tier department stores, traditional food and drug retailers, and e-commerce retailers under the Adidas, Beckham, Bozzano, Bourjois, Bruno Banani, CoverGirl, Jovan, Max Factor, Mexx, Monange, Nautica, Paixao, LeGer by Lena Gercke, Rimmel, Risque, Vera Wang, and Sally Hansen brands. It also sells its products through third-party distributors. The company was founded in 1904 and is headquartered in New York, New York. Coty Inc. is a subsidiary of JAB Beauty B.V.”

In other words, Coty’s products span from luxury boutiques to drugstore shelves, giving the company a presence across nearly every segment of the beauty market.

The Stock Dip

There’s a popular saying in investing: “buy the dip.” But personally, I’m choosing not to buy Coty at this dip. A few reasons guide this decision:

• Earnings Concerns – The dip seems linked to disappointing earnings results, including a forecasted decline in Q1 sales and a reported surprise Q4 loss. When a company posts a surprise loss, it signals that even management may be struggling to meet expectations, which is a red flag for me.

• Profitability Matters – I prefer buying into companies that are profitable and generating consistent cash flow. While Coty has strong brands and global reach, a surprise loss makes me cautious about jumping in, even at a seemingly discounted price.

• Market Volatility – Stocks that experience sharp, sudden declines due to earnings surprises can continue to be volatile for weeks or months. I tend to avoid entering such positions until I feel confident about the company’s recovery trajectory and fundamentals.

Perspective on Coty

While I’m staying on the sidelines, it’s hard to ignore Coty’s brand power and global presence. The company operates in an evergreen industry (beauty) and spans multiple market segments such as luxury and mass-market consumers. For long-term investors with a higher risk tolerance, a 20% dip could represent a compelling entry point. For me, however, the risk/reward ratio doesn’t align with my personal strategy at the moment.

Conclusion

• Coty is a global beauty company with strong brand recognition in both luxury and consumer segments.

• The stock recently declined over 20%, largely due to surprise earnings losses and weaker forecasts.

• “Buying the dip” can be tempting, but it’s important for me to consider the underlying reasons for the decline.

• Personally, I avoid buying into dips caused by losses, preferring profitable companies with clear growth momentum.

In short, Coty remains on my watchlist as a company to monitor, but I’m taking a cautious approach, admiring the brands from afar while waiting for clearer signs of recovery before considering any position.