What the Olaplex problem tells us about social media recommendations

The hair care brand has alerted investors to social media frenzy but is now plagued by online complaints

It was the opposite of the celebrity endorsements typical of social media. Earlier this month, Kristin Cavallari took to Instagram to tell her 4.5 million followers why they shouldn’t be using one of the trendiest products out there.

“This is not an ad at all,” the 35-year-old reality TV actress-turned-beauty influencer and entrepreneur said in a video. Her target was Olaplex, the hair care brand that’s skyrocketed in popularity, thanks in part to rave reviews from celebs like her.

“I used it too many times and it literally broke my hair,” said Cavallari, who declined to comment on the story. “This has happened to others before, so be careful when using it,” she said, before recommending another product.

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While the company says its offerings don’t damage hair, Cavallari’s post summarizes the reputational challenge facing Olaplex, a once-high-flying brand whose shares have plummeted 80% this year and whose market value wiped out $15 billion. amid increasing competition and a sell-off in the stock markets.

That drop came after the Santa Barbara, Calif.-based company raised $1.55 billion in an IPO in September 2021 that was the largest in the U.S. consumer staples sector in two decades, according to data compiled by Bloomberg.

Social media played a paramount role in Olaplex’s success. An unpaid endorsement from Kim Kardashian about a year after the company’s founding in 2014 garnered online attention, which the company has maintained in its pitch to investors — its IPO filing last year touted metrics like TikTok hashtag views ( 317 million).

That accelerator, however, has made Olaplex a cautionary tale about social media’s fickle power to lift a brand up — and then drag it down again.

A post on TikTok in February falsely claimed an Olaplex product was banned in Europe because it contained an ingredient that could cause infertility. The company tried to allay fears by saying it was an inactive ingredient that posed no risk and had been removed as a precaution.

But that did little to slow the chatter on social media.

“You live by the sword, you die by the sword,” said Jim Stengel, consultant and former chief marketing officer of Procter & Gamble. The downside of social media is that “you have no control”.

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The online disenchantment with Olaplex has continued, shifting to performance, with complaints of hair feeling like straw and worse.

A Facebook group where users discuss hair damage they attribute to Olaplex has 3,000 members since it surfaced in July. The content released includes photos of tufts of hair they say they’ve lost and screenshots that purportedly show the company’s response to refund requests. Some have said they have spoken to lawyers and are considering legal action.

Olaplex did not provide any executives for this story. In a statement, it said testing in-house and by independent laboratories showed no evidence the products cause hair loss or breakage. The company declined to share copies of this research.

“We recognize that experiencing hair loss and breakage can be distressing, and we sympathize with those who must endure it,” Olaplex said. “We remain confident that the evidence shows that Olaplex products are safe and effective.”

Joe Schwarcz, a chemist and director of McGill University’s Office of Science and Society, said he saw nothing in Olaplex to cause the harm described in the complaints. In theory, the company’s commitment-building claims make sense, says Schwarcz.

Leslie Simon, a 43-year-old resident of Denver, is a member of the Facebook group and said when she started using Olaplex’s shampoo and oil earlier this year, it initially made her hair stronger. But then her curls started falling out. Visits to the doctor yielded no answers. The blood work came back clean. Next, a piece of hair broke off and her scalp felt like it was on fire. Desperate for answers, Simon stopped using Olaplex products in August, and her hair recovered in a few months, she said.

“At one point in the shower, it was like hands full were slipping out of my hair,” Simon said. “You must be accountable.”

Olaplex is often credited with creating a new category of products that repair damaged hair. Sales hit $150 million in 2019 when private equity firm Advent International led an acquisition of the company, touting it as one of the “hair care brands with the highest engagement on social media.”

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Stylists were early fans, but as salons closed during the pandemic, Olaplex’s growth accelerated as sales to consumers through retailers and its website skyrocketed. The company went public with annual sales expected to more than double to nearly $600 million in 2021. (Advent, who declined to comment, still owns about 77% of the shares, according to documents.)

Analysts liked Olaplex’s patented formulas and loyal customers. JuE Wong, a cosmetics industry veteran who stepped in as chief executive officer in 2020, wasted no time reminding investors of the brand’s online frenzy, saying during her first conference call that it was the “No. 1 prestigious hair care brand on social media.” The company’s market value surpassed $19 billion earlier this year.

But the honeymoon didn’t last long. Korinne Wolfmeyer, an analyst at Piper Sandler, conducts a quarterly survey of Olaplex-certified hairstylists. In September, she pointed out that around 40% of stylists had heard negative reviews from clients, mostly related to dryness and breakage. Later that month, she downgraded shares of Olaplex to the equivalent of a hold rating, citing misinformation and competition as increasing risks.

The next month, Olaplex lowered an annual sales forecast it reiterated 10 weeks earlier, throwing out a wide web of blame, including competition and a flagging economy. The stock fell 57% in one day to $4.24 — about a fifth of its IPO price. Analysts now expect revenue to fall 20% this quarter.

Piper’s most recent survey showed that the percentage of respondents who ranked Olaplex as the best hair treatment also fell, while competitors like K18 rose. “We’re beginning to struggle with seeing it as the clear category leader it once was,” Wolfmeyer wrote in a research note this month.

To better educate consumers, Olaplex plans to send representatives to the 75 top-performing stores of retail partners Sephora and Ulta. (The brand has a total of about 1,800 chain stores.) It’s designed to “really debunk all the myths, help educate beauty consultants and also connect with consumers,” Wong said at an investor conference last week.

Social media has become an essential part of marketing, with brands paying influencers to promote products online. When done well, this paid content will lead others to share and create their own posts. This multiplier effect helped Olaplex keep ad spend in check. But the risk is that online buzz is volatile. Olaplex pointed this out in its IPO filing, saying that a failure to respond to the “accelerated impact of social media could hurt our business.”

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However, the company has room to win over consumers in the US, according to a recent Morning Consult survey commissioned by Bloomberg. Among adults aged 18-34, around 60% did not know about the brand or had no opinion about it. In contrast, only 11% had a negative opinion.

An underlying problem is that there’s a mishmash of advice on how to take advantage of Olaplex’s offerings. The company says its products repair all types of hair damage and that its range of products is suitable and beneficial for all hair types.

Meanwhile, interviews with a handful of clerks and stylists at stores selling the brand provided mixed advice. Some advised everyone to use the treatments, while others cautioned that only people with chemically treated hair should consider them. One said buyers were overusing the products.

Holly Reardon, 25, had been bleaching her hair since high school when she saw women online touting Olaplex’s ability to transform their locks. Following social media advice, she began leaving Olaplex’s #3 treatment, their best-selling product, in her hair for a few hours at a time. The company recommends using the product for at least 10 minutes and that it is more effective when left on for up to 90 minutes.

Reardon, who also used other Olaplex products, noticed an improvement but said after a year her hair felt like “hay.” In March, she posted a video on TikTok, where she has 147,000 followers, saying: “I have a very controversial statement, but I’m just going to do it. I think Olaplex ruined my hair.”

The Boston resident stopped using Olaplex and focused on moisturizing products, which along with a haircut and a return to her natural brunette hue have helped. After her Olaplex experience, she is now a little more skeptical.

“I definitely think social media can mislead people.”

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