Why Kim Kardashian’s $ 200 million Coty deal might not make her a billionaire (yet)

The Kardashian family continues their acquisition of beauty.

On Monday, beauty conglomerate Coty (Coty) announced that it will buy a 20% stake in Kim Kardashian’s cosmetics company KKW Beauty for $ 200 million, valuing the company at $ 1 billion.

Shares soared up to 15% on the news.

As part of the new deal, Coty will help further KKW as a global brand, developing hair care, personal care, skin and nail care products. It is similar to the Kylie Cosmetics expansion, which was founded by Kardashian’s younger sister, Kylie Jenner, in 2014.

Coty bought a majority stake in Jenner’s business for $ 600 million in November 2019, catapulting the company to an impressive valuation of $ 1.2 billion, a figure that has since been hotly disputed.

Coty has invested in KKW Beauty by Kim Kardashian and Kylie Cosmetics by Kylie Jenner

Still, the high ratings for both brands represent a larger trend in the beauty space, as interest in brands powered by social media and backed by celebrities continues to rise.

In general, traditional beauty houses have had to innovate to stay current in a world motivated by ‘likes’ and followers, and the purchase of KKW by Coty is another opportunity to attract a younger demographic.

Wall Street has come under fire in recent years 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 a drop in operating cash flow, and has since felt the impact of the pandemic.

The stock has dropped approximately 60% so far this year, reflecting a sharp drop in sales of luxury goods and fragrances amid blockages by coronavirus. The rise in new virus cases in certain southern states is also clouding prospects.

As if that wasn’t enough to digest, the manufacturer behind Kardashian and Jenner’s Seed Beauty products is now suing Coty and Kylie Cosmetics for the alleged trade secret trade, according to multiple reports.

The manufacturer behind the Kardashian and Jenner products are reportedly suing Coty and Kylie Cosmetics for the alleged trade secrets exchange.

Still, Coty has been aggressive in moving his change plan forward.

In addition to its recent acquisitions of KKW Beauty and Kylie Cosmetics, the company announced that former L’Oréal executive and founder of skincare company Oreveda Sue Nabi will take over as CEO, beginning in September 2020. This will be the Coty’s fifth CEO in four years.

With Coty’s recent purchase valuing KKW Beauty at $ 1 billion, many outlets immediately began referring to Kardashian-West as an official billionaire, with husband Kanye West praising the milestone on Twitter:

After the 20% acquisition of Coty, Kardashian’s KKW Beauty ownership is estimated to be 72%, with his mother Kris Jenner owning 8% of the business.

That, coupled with the fact that many believe his company was overvalued due to its large presence on social media, sets Kardashian’s net worth at around $ 900 million. It’s a rich sum to be sure, but not quite a billionaire.

It is also a net worth very similar to that of sister Kylie Jenner, whose billionaire status was recently revoked amid claims that she overinflated the size of her business, Kylie Cosmetics.

Still, Kardashian has many other sources of income that could help her make it to 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 line of fitness clothing, along with the mobile game “Kim Kardashian Hollywood”.