Why Olin Corp Stock Dropped Today

Shares of chemicals-and-ammunition-maker Olin Corp (NYSE: OLN), soon to merge with Huntsman (NYSE: HUN), tumbled 17.8% through 11:35 a.m. ET Friday after missing earnings last night.

Heading into the report, analysts forecast Olin would earn $0.12 per share on sales of $1.8 billion. Sales came up short at $1.7 billion, though, and instead of reporting a 12-cent profit, Olin reported a loss of $0.12 per share.

Oops.

Image source: Getty Images.

Olin Q2 earnings

Olin operates three main businesses: Chlor Alkali Products and Vinyls, where sales declined 14% year over year; Epoxy, where sales grew 27%; and Winchester -- the ammunition company -- which posted 12% sales growth.

The two gainers balanced out the single declining business, and when all was said and done, Olin ended up with sales shrinking only 1% year over year.

(That's the good news. The bad news is that the tiny sales decline didn't prevent Olin's losses from soaring 12x in size, from $0.01 per share a year ago, to $0.12 this time around.)

What's next for Olin stock

But here's what investors need to consider: Olin is in the process of conducting a merger of equals with chemicals company Huntsman. It probably had an incentive, therefore, to take a "big bath" approach to its bad news this past quarter, cramming as many losses as possible into the quarter so that future quarters, post-merger, will look better by comparison -- and so management will look smarter for undertaking the merger.

Saying that "second quarter 2026 results included acquisition-related costs of $10.6 million related to this pending merger" further suggests that this is what was going on.

Will it work out for Olin? That remains to be seen -- as does whether the merger even happens. Closing is only scheduled to happen sometime in early 2027, so... stay tuned.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.