ELF Beauty Stock Plummets 28% Following Mixed Earnings Report
ELF Beauty (NYSE: ELF) experienced a significant stock decline on Friday, with shares dropping as much as 28% following the release of mixed earnings results for its fiscal third quarter. The beauty company’s stock price fell to $66.10, marking a 28.2% decrease and extending its overall decline to approximately 71% from its peak.
The sharp downturn comes after a remarkable rally that saw ELF Beauty’s stock surge from around $25 to a high of about $220 per share in June. However, the company’s latest guidance fell short of analyst expectations, primarily attributed to reduced social media activity.
ELF Beauty revised its revenue projections downward from $1.30 billion to $1.31 billion, below the $1.34 billion expected by analysts. Additionally, earnings per share were forecasted between $3.27 and $3.32, also falling short of the $3.54 anticipated by Wall Street.
CEO Tarang Amin pointed to a “weak month” in January as a key factor in the lowered guidance. Amin cited two main contributors to the reduced social media engagement: the Los Angeles wildfires and uncertainty surrounding a potential TikTok ban. The wildfires led to a decrease in social media activity as users refrained from posting during the crisis, while the TikTok situation created platform engagement concerns.
Despite the short-term setback, Goldman Sachs analysts maintain a positive long-term outlook for ELF Beauty. The company is viewed as a fast-growing and disruptive player in the beauty industry, continuing to gain market share and maintain growth momentum amid broader softening trends in the US beauty sector. Goldman Sachs maintained a “Buy” rating on the stock but adjusted its price target from $165 to $142.
As the beauty industry navigates these challenges, ELF Beauty’s performance will be closely watched by investors and industry analysts alike. The company was also featured as the stock of the day in a new Business Insider segment, highlighting its significance in the current market landscape.
