Why e.l.f. Beauty Stock Collapsed 40% In 2025

• e.l.f. Beauty is seeing slowing integrated gross growth.

• It conscionable made an costly acquisition fueled by debt.

• The banal inactive trades astatine a premium net ratio contempt its monolithic drawdown.

• 10 stocks we similar amended than e.l.f. Beauty ›

Shares of e.l.f. Beauty (NYSE: ELF) slipped 39.4% successful 2025, according to information from S&P Global Market Intelligence. The quality institution focused connected wide marketplace products astatine a little terms constituent made an acquisition this year, but is seeing slowing maturation astatine a premium net multiple, which is simply a look for atrocious banal performance.

The banal is present down 60% from all-time highs. Here's wherefore e.l.f. Beauty banal was falling again successful 2025.

For years, e.l.f. Beauty has been a marketplace stock taker successful quality categories specified arsenic articulator gloss, makeup, and eyeliner, starring to awesome gross growth. In 2025, that maturation began to stagnate.

The institution made an acquisition of upstart Rhode, which volition lend $200 cardinal successful gross for the 2026 fiscal year, starring to 18%-20% wide maturation for the company. However, if you portion retired inorganic income from acquisitions, gross is expected to lone turn 3%-4% this fiscal year, which is simply a important slowdown from caller quarters. This is wherefore e.l.f. Beauty banal has begun to slip.

At the aforesaid time, e.l.f. Beauty's gross borderline has slipped from 68% to 66%, indicating it has to discount connected inventory successful bid to thrust sales, different antagonistic motion for the business. With the banal opening the twelvemonth trading astatine a premium price-to-earnings ratio (P/E) of 75, it is nary wonderment that shares suffered past year. Slowing gross maturation connected a premium P/E ratio is simply a look for disaster.

Even though gross grew 14% past 4th -- immoderate inorganic -- e.l.f. Beauty's operating income declined to a measly $7.7 cardinal arsenic it spent much wealth connected marketing. This is different atrocious motion for the business.

Declining net connected slowing gross maturation person meant that e.l.f. Beauty's P/E ratio is inactive trading astatine a premium of 62, adjacent aft this immense banal terms drop. This is simply a worrisome valuation due to the fact that of the company's slowing integrated gross growth.

What's more, e.l.f. Beauty has taken connected $600 cardinal successful indebtedness to concern its acquisition of Rhode for $1 billion. With conscionable implicit $100 cardinal successful escaped currency flow, it volition instrumentality e.l.f. Beauty a agelong clip to wage down this debt.

Add everything together, and e.l.f. Beauty banal does not look similar a beardown buy-the-dip campaigner today.

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