E.l.f. Beauty Stock Suffers Worst Drop on Record After Earnings. What’s Startling Investors.

Retailer e.l.f. Beauty posted lower-than-expected earnings and net sales in its fiscal second quarter. (Astrid Stawiarz/Getty Images for POPSUGAR)

Key Points

• E.l.f. Beauty’s plunges after reporting lower-than-expected quarterly earnings and a soft fiscal-year outlook.
• The company guides for 2026 adjusted earnings of $2.80 to $2.85 a share and sales of $1.55 billion to $1.57 billion.
• Fiscal second-quarter adjusted earnings of 68 cents a share miss analysts’ forecasts.

Shares of e.l.f Beauty plunged Thursday on a one-two punch of lower-than-expected quarterly earnings and a soft outlook for the fiscal year.

The beauty retailer guided for 2026 adjusted earnings in the range of $2.80 to $2.85 a share and sales between $1.55 billion and $1.57 billion. Analysts were looking for earnings of $3.53 a share and sales of $1.65 billion.

Fiscal second-quarter results were nothing to write home about. The company posted adjusted earnings of 68 cents a share, below the $1.02 analysts had forecast, according to FactSet. Net sales grew by 14% sequentially to $343.9 million, but this number came in sharply below the $473 million Wall Street had anticipated.

Shares sank 35% to $77, putting e.l.f. Beauty on pace for its largest same-day percentage decrease on record, according to Dow Jones Market Data.

TD Cowen analysts noted Thursday that the weaker-than-expected guidance was tied to delayed retailer price updates in the second quarter. The company declined to issue guidance in the previous two quarters, largely due to macro uncertainty, and was among the first in the beauty industry to hike prices, with a sweeping $1 price increase across its product range this summer.

The firm has a Buy rating on e.l.f. stock with a $110 price target, down from $145. The target still indicates the price could rise as much as 43% from Thursday’s levels.

Despite the market reaction, Raymond James analyst Olivia Tong asserted that these were “blemishes, not breakdowns.” One highlight in the quarter was the acquisition of Rhode, the social media-famous skincare brand e.l.f. bought earlier this year.

The acquisition in August contributed $52 million to second-quarter net sales. On an organic basis, excluding Rhode, net sales were down roughly 3%, CEO Tarang Amin said on the earnings call.

“ELF is, and should be, in the penalty box for now, but we continue to believe in a multi-year opportunity to expand to new geographies and grow Rhode at a disproportionate pace,” Tong said. She maintained a Strong Buy rating on the shares while cutting her price target to $135 from $165.

Barron’s selected e.l.f. Beauty as a stock pick in September. Shares have cratered more than 42% since the article was published.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com