The Kardashian family is continuing its beauty takeover.
Shares skyrocketed as much as 15% on the news.
As part of the new deal, Coty will help further advance KKW as a global brand by developing hair care, personal care, skin care and nail products. It’s similar to the expansion of Kylie Cosmetics, which was founded by Kardashian’s younger sister Kylie Jenner back in 2014.
Coty purchased a majority stake in Jenner’s business for $600 million back in November of 2019, which catapulted the company to an impressive $1.2 billion valuation — a figure that’s since been hotly disputed.
Still, the sky-high valuations of both companies represent a larger trend in the beauty space as interest in social media-driven, celebrity-backed brands continues to balloon.
Overall, traditional beauty houses have had to innovate in order to keep up in a world motivated by ‘likes’ and followers — and Coty’s KKW purchase is yet another opportunity to appeal to a younger demographic.
In recent years, the company has been highly criticized by Wall Street for overvaluing its acquisitions and failing to keep up with contemporary makeup trends.
Even before the coronavirus hit, Coty was in a challenged position with falling operating cash flow, and has since felt the impact of the pandemic.
So far this year, the stock is down roughly 60% — reflecting a steep drop in the sales of luxury goods and fragrances amid coronavirus lockdowns. The new virus cases surge in certain southern states is also clouding the outlook.
As if that weren’t enough to digest, the manufacturer behind Kardashian’s and Jenner’s products, Seed Beauty, is now suing Coty and Kylie Cosmetics for the alleged sharing of trade secrets, according to multiple reports.
Still, Coty has been aggressive in advancing its turnaround plan.
Besides its recent acquisitions of both KKW Beauty and Kylie Cosmetics, the company announced that former L'Oréal executive and founder of skincare start-up Oreveda Sue Nabi will be taking over as CEO, starting in September 2020. This will be Coty’s fifth CEO in four years.
Is Kim Kardashian a billionaire?
With Coty’s recent purchase valuing KKW Beauty at $1 billion, many outlets immediately began to refer to Kardashian-West as an official billionaire — with husband Kanye West praising the milestone on Twitter:
I am so proud of my beautiful wife Kim Kardashian West for officially becoming a billionaire— ye (@kanyewest) June 30, 2020
You’ve weathered the craziest storms and now God is shining on you and our family
So blessed this is still life
So I made you this still life
We love you so much pic.twitter.com/Vvtgzodnah
But according to estimates by Forbes, Kardashian is most likely not a billionaire just yet.
After Coty’s 20% acquisition, Kardashian’s KKW Beauty ownership is estimated to be at 72%, with her mother Kris Jenner owning 8% of the business.
That — coupled with the fact that many believe her company was overvalued due to her large social media presence — sets Kardashian’s net worth at just around $900 million. That’s a rich sum to be sure, but not quite a billionaire.
Still, Kardashian has quite a few other revenue streams that could help her reach the billionaires club very soon.
Most recently, the reality star signed an exclusive podcast deal with Spotify (SPOT) for an undisclosed amount. She also owns a popular shape-wear line, along with the mobile game “Kim Kardashian Hollywood.
Alexandra is a Producer & Entertainment Correspondent at Yahoo Finance. Follow her on Twitter @alliecanal8193