On the surface, the situation with Revlon (NYSE:REV) stock looks like a bleak one. Currently in Chapter 11 bankruptcy, it appears as if shares in the famed cosmetics firm have reached a “game over” moment. In most situations, common shareholders are wiped out in a Chapter 11 bankruptcy. Creditors typically take ownership in an attempt to recover their losses.

But as we’ve seen in recent years, Chapter 11 is not necessarily an automatic trip to zero for bankrupt stocks. Take, for example, the Hertz Global (NASDAQ:HTZ) bankruptcy in 2020.

At first, seasoned investors rolled their eyes, as retail traders bought the stock. In the end, however, these traders ended up profiting.

With this, many speculators have piled into Revlon, hoping for a similar outcome. Will a similar outcome play out? Possibly, making it a play worth considering (if you can stomach the risk).

REV Stock: It May Not be ‘Game Over’ Just Yet

It goes without saying that comparing the situation with Revlon to the situation with Hertz isn’t apples-to-apples. The post-pandemic travel recovery likely played a role in enabling the car rental company to exit bankruptcy in a way favorable to common shareholders.

That said, it isn’t a given that investors in REV stock see their shares crater to zero. Even as the company itself has told the judge overseeing its bankruptcy case that it believes the common equity is worthless, and therefore a committee representing minority shareholders isn’t necessary.

How could this be the case? It’s worth noting that in the Hertz bankruptcy, that was no official shareholder committee. Hence, a lack of one in this bankruptcy case doesn’t necessarily mean common shareholders will end up with nothing when the reorganization completes.

More importantly, although (based on bond prices), many “smart money” investors are betting there is little chance of a full recovery for creditors, other institutional buyers have a different view. There may still be a path for the stock to emerge from bankruptcy worth more than its current trading price.

The ‘Smart Money’ Bull Case for Revlon

Headlines about REV stock may remark how retail “meme traders” are buying up shares. Mostly, due to its appeal as a short-squeeze play. Nevertheless, they are not the only type of investors that have dabbled in the stock lately.

For example, as InvestorPlace’s Eddie Pan reported Aug. 15, Morgan Stanley (NYSE:MS) has bought a block of Revlon shares. It’s possible the investment bank has a similar thesis to that of another “smart money” investor, Mittleman Investment Management.

In its most recent quarterly letter to its fund investors, Mittleman disclosed that it has sold “a good portion of its position,” but it also stated that it still believes asset sales could still result in the realization of proceeds above $10 per share.

There’s big potential with Revlon’s brand portfolio, which also includes brands like Elizabeth Arden. Strategic buyers (the company’s larger rivals) may be willing to pay up for its assets. Per Mittleman, this could leave the common shareholders with at least $10 per share in value. Or, perhaps as much as $22 per share. Not too shabby, compared to what the stock trades for today (around $8 per share).

The REV Stock Takeaway

Revlon stock currently earns a “B” rating in my Portfolio Grader. Admittedly, even as there’s a path to substantially higher prices, it’s not set in stone the stock will continue to go down this particular path.

There’s still a risk of it hitting zero. This makes it an opportunity only for investors with a healthy risk appetite. In addition, risk-hungry investors should still do their homework before deciding whether the risk/return proposition is favorable. I wouldn’t recommend blindly following the “smart money” bull case mentioned above.

With the growing chance of a global recession, rival cosmetics firms may not be in the mood to pay top dollar for Revlon’s assets. Assets that, while they have high potential, have lost their luster compared to other brands.

Still, while a high-risk situation, as a path to profit remains, REV stock may be worth it as a speculative wager.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.