[Generated Title]: E.l.f. Beauty's Stock Plunge: Did Hailey Bieber's Rhode Acquisition Backfire?
Okay, so E.l.f. Beauty's stock got absolutely hammered yesterday. Down almost 30%? Ouch. The excuse? Weaker-than-expected full-year guidance. But let's be real, that's corporate speak for "we screwed up." The knee-jerk reaction is always to blame something, and in this case, it looks like Hailey Bieber's Rhode might be the convenient scapegoat.
Rhode Rage?
E.l.f. dropped a cool billion on Rhode earlier this year, and the promise was $200 million in sales this year, ramping up to $300 million annually. Sounds great on paper, right? Except, apparently, the reality is a bit… different. They’re blaming tariffs and all that jazz, but give me a break. A billion dollars is a lot of money. And now E.l.f. expects full-year revenue to be between $1.55 billion and $1.57 billion, implying 18% to 20% sales growth. Analysts were expecting $1.65 billion. That's a miss, folks. A big one.
Rhode launched in Sephora stores nationwide in September. And it was apparently the biggest brand launch the retailer has seen in North America. Biggest launch, huh? So why isn't that translating to bigger numbers for E.l.f.? Are people just looking at the product and not buying it? Or is Sephora exaggerating the hype?
And here's where my brain starts to hurt. E.l.f. beat earnings expectations, 68 cents a share versus 57 cents expected. So they made more money than expected, but the stock tanks because they aren't projecting to make even more money in the future? This is the kind of backwards logic that makes me want to throw my laptop out the window. It's like Wall Street punishes you for doing well, because you could always be doing better.
Tariff Troubles and Price Hikes
E.l.f. is saying tariffs are to blame, and offcourse, they primarily source their makeup from China. Trump's tariffs are still biting them in the butt, apparently. Their net income fell by 84% because of these tariffs. Eighty-four percent! That's insane. E.l.f. Beauty stock plunges 29% on weak guidance, tariff impact - CNBC
They tried to offset this with a $1 price increase on August 1st. A whole dollar! Like that's going to magically solve everything. Did anyone at E.l.f. even do the math on that? A dollar increase isn't going to offset an 84% drop in net income. It's like putting a band-aid on a severed limb.
The thing is, everyone is blaming Trump for all the inflation thats going on, but are we really supposed to believe that it is all his fault? I mean, come on.
And get this: Gross margin fell by 1.65 percentage points in Q2. So, they are making less money on each product sold. Less revenue, less profit… this ain't a good look, folks. Not a good look at all.
The Bieber Bubble?
So, back to Rhode. The elephant in the room. Is Hailey Bieber's brand not living up to the hype? Is it a flash in the pan? A celebrity-driven bubble that's about to burst?
I mean, let's be real, a lot of these celebrity brands are built on nothing but the celebrity's name. The product itself is often mediocre at best. Is Rhode any different? I haven't tried it, mostly because I refuse to pay a premium for something just because a celebrity slaps their name on it.
But hey, maybe I'm the crazy one here. Maybe Rhode is actually amazing, and I'm missing out. But the numbers don't lie. Something isn't adding up, and E.l.f.'s stock price is paying the price. The company is saying that the second quarter is expected to see the greatest impact from tariffs, with the impact moderating sequentially. Uh huh. Sure it will.
So, Was It Worth It?
A billion-dollar gamble on a celebrity brand when your core business is getting hammered by tariffs? Sounds like a recipe for disaster. E.l.f. is trying to play it cool, saying everything is fine, but the market clearly doesn't buy it. And honestly, neither do I.
