E.l.f. Beauty Faces Challenges in China: Tariffs and Elevated Valuations Endanger ETF Investments
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Nov 06 2025
0mins
Source: Benzinga
E.l.f. Beauty Stock Decline: E.l.f. Beauty Inc's stock plummeted 29% on Wednesday and an additional 36% on Thursday, negatively impacting several consumer and retail ETFs that are exposed to similar high-multiple, tariff-sensitive companies.
Impact of Tariffs on Earnings: The company's net income dropped 84% due to new tariffs, leading to a decline in gross margins and prompting a price increase across its products, raising concerns about the broader vulnerability of consumer brands relying on global supply chains.
Valuation Concerns: Despite the significant selloff, E.l.f. still trades at around 70 times forward earnings, a valuation more suited for tech startups than a cosmetics company facing margin pressures, prompting analysts to cut price targets and ratings.
ETF Manager Caution: The situation serves as a reminder for ETF managers that high-growth stories can quickly become liabilities, urging investors to reassess their exposure to consumer goods and retail sectors, particularly those with premium valuations.
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Analyst Views on ELF
Wall Street analysts forecast ELF stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for ELF is 117.50 USD with a low forecast of 85.00 USD and a high forecast of 136.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
13 Analyst Rating
10 Buy
3 Hold
0 Sell
Strong Buy
Current: 76.820
Low
85.00
Averages
117.50
High
136.00
Current: 76.820
Low
85.00
Averages
117.50
High
136.00
About ELF
e.l.f. Beauty, Inc. is a multi-brand beauty company. The Company offers inclusive, accessible, clean, vegan, and cruelty-free cosmetics and skincare products. The Company's family of brands includes e.l.f. Cosmetics, e.l.f. SKIN, Naturium, Well People, Keys Soulcare, and rhode. Its e.l.f. SKIN is an ingredient-focused, dermatologist-developed formulas for every eye, lip and face. The Company operates across beauty categories including eye, lip, and face makeup, beauty tools and accessories, and skincare products. Its color cosmetics and skin care products are broadly sold through food, drug, and mass channels, as well as through department stores and direct and specialty channels. The Company sells its products with retailers in the United States, as well as internationally. It also sells its products online through its own direct e-commerce channels, as well as through other e-commerce Websites.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- High Strike Call Options: The $84 strike call option for e.l.f. has seen particularly high activity with 627 contracts traded today, representing about 62,700 underlying shares, reflecting investor expectations for future price appreciation.
- Toast Inc. Options Surge: Toast Inc. experienced even higher options trading volume at 51,966 contracts, translating to approximately 5.2 million shares, which constitutes 46.1% of its average daily trading volume of 11.3 million shares, showcasing strong investor interest in its future trajectory.
- Bullish Call Options: The $30 strike call option for Toast has recorded 22,461 contracts traded today, representing around 2.2 million shares, indicating a bullish sentiment among investors regarding the company's growth prospects.
See More
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- Earnings Beat: E.l.f. Beauty reported an adjusted EPS of $1.24 for Q3, surpassing the consensus estimate of $0.72, with revenue of $489.5 million exceeding expectations of $459.1 million, indicating robust growth across retail and e-commerce channels.
- Guidance Upgrade: The company raised its full-year adjusted EPS guidance to a range of $3.05 to $3.10 and revenue guidance to $1.60 billion to $1.61 billion, both above consensus estimates, reflecting management's confidence in future growth prospects.
- Stock Price Pressure: Following an initial post-earnings rally, E.l.f. Beauty's shares fell 8.15% on Monday due to profit-taking and a cautious reassessment of the guidance, highlighting investor concerns about sustaining upward momentum in the near term.
- Technical Analysis: Currently, E.l.f. Beauty's stock is trading 13.9% below its 20-day SMA and 24.6% below its 100-day SMA, indicating significant short-term weakness, with key support at $69.00, suggesting traders should remain cautious.
See More
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- Individual Stock Surge: AppLovin Corp. (NASDAQ:APP) surged more than 14% after logging four consecutive weekly declines, reflecting optimistic market sentiment regarding its future growth potential, which could draw more investor attention to the company.
- Commodity Market Recovery: Oil prices rose over 2% to $64.6 a barrel, while gold rebounded 2.5% to $5,090 an ounce, and silver soared over 6% to $82 an ounce, indicating an improvement in market risk appetite that may positively impact related industries.
See More
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- Brand Awareness Potential: Media studies indicate that successful Super Bowl ads can increase brand awareness by 43%, and e.l.f.'s ad failed to capitalize on this potential, which may affect its long-term market performance.
- Significant Advertising Investment: e.l.f. Beauty has ramped up its advertising investment to 24%-26% of net sales for fiscal 2025, approximately $281.5 million, reflecting an over 800% increase over four years and far exceeding the industry average of 10%-20%.
- Optimistic Future Outlook: Despite the ad's poor reception, e.l.f. Beauty has raised its fiscal 2026 net sales growth outlook to 22%-23%, demonstrating the company's confidence in future growth prospects.
See More
