e.l.f. Beauty bets big on rhode

[Autumn skincare and autumn makeup concept with beauty products on table] Beo88/iStock via Getty Images E.l.f. Beauty (NYSE:ELF [https://seekingalpha.com/symbol/ELF]) is paying [https://seekingalpha.com/pr/20118954-e-l-f-beauty-announces-definitive-agreement-to-acquire-rhode-in-1-billion-deal]$1B for a beauty brand with $212M in sales, betting that rhode’s distribution opportunities and the founder’s media exposure will make the pricey deal a bargain down the road. “If you take a look at e.l.f. Beauty, we just finished our 25th consecutive quarter of net sales and market share growth. e.l.f.

Beauty is on fire, and we're further fueling that fire with the acquisition of rhode,” e.l.f. Beauty Tarang Amin said on the company’s earnings call [https://seekingalpha.com/article/4790678-e-l-f-beauty-inc-elf-q4-2025-earnings-call-transcript] Wednesday. At 3.8x net sales, the price tag for a newcomer in the intensely competitive beauty industry seems steep. But e.l.f. (NYSE:ELF [https://seekingalpha.com/symbol/ELF]) has big plans for rhode through investments in marketing and easing rhode’s transition into retail.

Rhode will launch in Sephora’s U.S. and Canadian stores this fall and in the UK by the end of the year. “It’s a very fast-growing brand…and we have very high hopes as [rhode] expands into Sephora as well,” Amin added on the call. “The investment tightens ELF’s relationship with Gen Z consumers who seek out prestige level products,” said BofA Securities’ Anna Lizzul with founder Hailey Bieber’s extensive media exposure no doubt a defining attribute towards the purchase. The company expects the rhode acquisition to be accretive to topline growth, adjusted EBITDA margins and earnings beginning in fiscal Q2.

The acquisition news was simultaneous with the company’s decision to pull FY26 guidance [https://seekingalpha.com/news/4453194-e-l-f-beauty-pulls-fy26-guidance-acquires-rhode-for-1b], triggering a knee-jerk reaction to the downside in shares. With 75% of its supply chain originating in China, the company would not issue guidance “due to the wide range of potential outcomes related to tariffs.” “We understand management’s rhetoric around uncertainty as to where tariffs will ultimately land, leading to a wide range of possible outcomes that may require updating once policies take shape. However, we believe investors would appreciate it if management had given FY26 guidance based on the current scenario of 55% tariff, given that the company has already announced the $1 price increase across the board,” J.P. Morgan’s Andrea Teixeira said in Thursday’s research note. While this likely fueled the negative reaction in the stock late Wednesday, all seems to be forgiven judging by the rally in e.l.f.

(NYSE:ELF [https://seekingalpha.com/symbol/ELF]) shares Thursday. Coupled with a broader market rally on the suspension of certain U.S. import tariffs, e.l.f. Beauty (ELF [https://seekingalpha.com/symbol/ELF]) shares were launched 33% higher, piercing resistance at the 200-day moving average for the first time since August. MORE ON E.L.F.

BEAUTY * e.l.f. Beauty, Inc. (ELF) Q4 2025 Earnings Call Transcript [https://seekingalpha.com/article/4790678-e-l-f-beauty-inc-elf-q4-2025-earnings-call-transcript] * e.l.f. Beauty Q4 Preview: The Only Bullish Catalyst I Am Waiting To See [https://seekingalpha.com/article/4789740-elf-beauty-q4-preview-the-only-bullish-catalyst-i-am-waiting-to-see] * e.l.f. Beauty: For Long-Term Contrarians Only [https://seekingalpha.com/article/4788844-elf-beauty-long-term-contrarians-only] * Biggest stock movers Thursday: NVDA, AI, CRM, and more [https://seekingalpha.com/news/4453277-biggest-stock-movers-thursday-nvda-ai-and-more] * 4 stocks to watch on Thursday: COST, DELL, KSS and ELF [https://seekingalpha.com/news/4453398-4-stocks-to-watch-on-thursday-cost-dell-kss-and-elf]