e.l.f. Beauty Sees Record Surge After Earnings, Rhode Deal

Key Points

• e.l.f. Beauty is back in the hearts of investors, with the stock seeing one of its best days on record on May 29.
• e.l.f.'s strong earnings and acquisition of a company high-profile celebrity backing led to a +20% gain in shares.
• The company provided extensive details on tariff-related impacts, and Bank of America thinks highly of e.l.f.'s new acquisition.

After seeing shares take a huge tumble through the first several months of 2025, e.l.f. Beauty NYSE: ELF may have just had its best day of all time.

Shares of e.l.f. are on pace for their highest single-day return since the company went public back in 2016, up approximately 25% as of 2:30 EST trading on May 29.

The company, known for its cosmetics that provide a mixture of quality and affordability, reported earnings that beat expectations. It also revealed the acquisition of another beauty brand with a huge name attached to it.

e.l.f.’s Earnings Impress, Tariffs Remain a Key Sticking Point

In the company’s full-year fiscal 2025 Q4 results, e.l.f. reported net sales growth of 28%, which the company touted as industry-leading. In Q4, the consumer staples company's net sales grew by 4%, outpacing the less than 2% growth analysts had forecasted. e.l.f. also nearly doubled its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin. The figure jumped from around 12.7% in fiscal Q4 2024 to nearly 24.5%.

This helped drive a 47% increase in e.l.f.’s adjusted diluted earnings per share (EPS) to $0.78, significantly exceeding expectations of approximately 36% growth. The notable blemish on the report was that e.l.f. did not provide guidance for fiscal 2026. The company cited “the wide range of potential outcomes related to tariffs” as the reason why it has a large exposure to tariff risks.

On the earnings call, e.l.f. executive Kristina Casey Katten noted that 75% of the company’s global production comes from China. These imports to the United States are currently subject to 55% tariffs. Of this, 25% is due to policy enacted in 2019. The other 30% went into effect in mid-May and is in place through mid-August. If tariffs stay at this level, the company estimates a $50 million annual increase in its cost of goods sold.

For perspective, this would have lowered the company’s adjusted gross margin from 71.2% to 67.4% in fiscal 2024. A return of reciprocal tariffs to the 145% level would create a “much higher” impact on the company. This is the reason why shares dropped 19% in reaction to Trump’s Liberation Day announcement. The stock was down over 60% in 2025 through mid-April. e.l.f. plans to increase prices across all its products by $1 on Aug. 1 to combat tariffs. Optimizing its supply chain and growing its international business, which is not subject to tariffs currently, will be other key mitigators. International sales are the fastest-growing part of e.l.f. ’s business, rising 60% in fiscal 2025. 

Bieber's Rhode Deal Adds New Growth Path for e.l.f.

Adding to the enthusiasm around e.l.f. was the company’s announcement that it will acquire Rhode. e.l.f. describes Rhode as a “fast-growing, multi-category lifestyle beauty brand." In less than three years since its founding, Rhode achieved $212 million in net sales over the last 12 months.

Hailey Bieber, the wife of Justin Bieber, one of the world’s most famous pop stars, is the founder of Rhode. She is also the niece of famed actor Alec Baldwin.

Beauty and cosmetics often thrive because of their ties to celebrities. This connection has helped Rhode succeed and sparked e.l.f.'s interest in buying the brand. The acquisition is set to close in calendar Q3 2025.

The deal has a potential total price of $1 billion. e.l.f. will pay $800 million upfront and $200 million over the next three years if Rhode meets growth targets. e.l.f. will fund the $800 million using around $600 million in debt, and issuing 2.6 million new e.l.f. shares.

This is a moderately dilutive event to existing shareholders, poised to increase the company’s issued share count by around 4.7%. It will also nearly triple the company’s total debt from its current $305 million. However, the company’s balance sheet was in a very solid place before the acquisition. e.l.f.’s EBITDA was over 21 times higher than the interest it had to pay on its debt last quarter, and the firm expects its liquidity position to remain strong.

BofA Touts Rhode Purchase, e.l.f. Remains Far From All-Time-Highs

May 29 marks one of the best days ever for shareholders of e.l.f. Beauty. Analysts at Bank of America increased their price target on e.l.f. to $113, believing that Rhode will “contribute positively to e.l.f. Beauty’s gross margin, EBITDA margin, and earnings.” Despite e.l.f.’s huge share price revival since mid-April, the stock remains far from recovering from its all-time high of nearly $222 reached in March 2024.