What Happened?
Shares of cosmetics company e.l.f. Beauty (NYSE: ELF) jumped 2.8% in the morning session after the company reported strong third-quarter results that surpassed expectations and raised its full-year forecast.
Revenue for the quarter grew 38% year-over-year to $489.5 million, while earnings per share also came in well ahead of estimates. A key driver of this success was the acquisition of the luxury brand Rhode, founded by model Hailey Bieber. This new brand contributed significantly to sales, especially after a record-breaking launch in the United Kingdom. In light of the strong performance, management increased its sales and profit projections for the full fiscal year 2026. This positive update followed a recent presentation where the company highlighted its history of consistent growth over the previous decade, having achieved 28 straight quarters of net sales growth.
After the initial pop the shares cooled down to $92.00, up 1% from previous close.
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What Is The Market Telling Us
e.l.f. Beauty’s shares are extremely volatile and have had 41 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 32.6% on the news that the company reported mixed third-quarter 2025 results and issued a disappointing financial outlook. While its adjusted earnings per share of $0.68 beat expectations, revenue of $343.9 million fell short of analysts' estimates. The main concern for investors, however, was the company's forecast for the full year. Management's guidance for revenue of $1.56 billion and adjusted EBITDA of $304 million, at their respective midpoints, came in significantly below Wall Street's projections. Adding to concerns, the company's operating margin fell to 2.2% from 9.3% in the same quarter last year. The combination of a revenue miss and a weak forecast that implied slowing growth and profitability prompted a negative reaction from investors.
e.l.f. Beauty is up 18.2% since the beginning of the year, but at $92.00 per share, it is still trading 37.3% below its 52-week high of $146.67 from September 2025. Investors who bought $1,000 worth of e.l.f. Beauty’s shares 5 years ago would now be looking at an investment worth $3,625.
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