Why Coty Stock Dropped 10.5% at the Open Today
Shares of Coty (NYSE: COTY) fell as much as 10.5% in the first half hour of trading on May 10. The big news was the company's pre-market earnings update for the fiscal third quarter of 2021. Although the company tried to emphasize the positives as it attempts to turn its business around, investors were focusing on the negatives in early trading.
On the top line, Coty's sales totaled $1.03 billion. That was down a little over 3% from the same quarter in the previous year. A 450 basis point improvement in the company's adjusted gross margin, plus cost containment efforts, reduced restructuring costs, and mix (among other things), helped to improve adjusted EBITDA from negative $1.4 million in the fiscal third quarter of 2020 to $183 million this year. That said, adjusted earnings were basically flat in the quarter, up from a $0.14-per-share loss last year. Wall Street had been expecting Coty to report earnings of around $0.01 a share, so it missed on the bottom line, which investors tend to view negatively.
Image source: Getty Images.
Source Fool.com
