e.l.f. Beauty, Inc. (NYSE: ELF) Securities Fraud Class Action

LEAD PLAINTIFF DEADLINE IS MAY 5, 2025.

If you have suffered losses and would like to discuss your rights, please fill out this form or you may contact Jonathan Naji, Esq. at (484) 270-1453 or via e-mail at info@ktmc.com.

Case Background:
Class action lawsuits have been filed on behalf of those who purchased or otherwise acquired e.l.f. Beauty, Inc. (“Elf”) (NYSE: ELF) securities between May 25, 2023, and February 6, 2025, inclusive (the “Class Period”).

The Class Period begins on May 25, 2023, the day after Elf issued a press release announcing its financial results for the fourth quarter and fiscal year ended March 31, 2023. In the press release, Elf stated that “Net sales increased 78% to $187.4 million, primarily driven by strength across our retailer and e-commerce channels,” and that “We grew net sales by 78% in Q4, marking our seventeenth consecutive quarter of net sales growth.” During the corresponding earnings call held that same day, Elf touted the company’s strong demand trends, stating “First and foremost, we plan to continue to invest in our people and infrastructure to fuel our growth. As discussed, this year we plan to invest behind our ERP transition to SAP, working capital to support the strong demand we continue to see, and increasing our distribution capacity.”

On August 9, 2024, investors began to learn the truth about the slowing consumer demand for Elf products when the company released its fiscal first quarter 2024 results and provided its outlook for fiscal second quarter 2024. Specifically, Elf issued meaningfully weaker-than-anticipated guidance for fiscal second quarter 2024 and acknowledged downward pressure on its adjusted EBITDA guidance, approximately $30 million lower than expected by analysts, signaling a sequential slowdown in growth. On this news, the price of Elf common stock declined $27.12 per share, or approximately 14.4 %, to close at $160.83 per share on August 9, 2024. 

Then, on November 20, 2024, Muddy Waters Research published a report finding that: (1) Elf had “materially overstated revenue over the past three quarters” by approximately $135 million to $190 million; (2) in “Q2 FY24, ELF management realized its growth narrative was in trouble as its inventory built”; (3) Elf then began reporting inflated revenue and profits; (4) Elf’s reported inventory also appeared to be materially inflated to “account for cash that has not really come in”; and (5) Elf concealed its inventory challenges by falsely attributing its rising inventory to supposed changes in its sourcing practices rather than insufficient sales.  On this news, the price of Elf common stock declined $2.71 per share, or approximately 2.23%, from a close of $121.71 per share on November 19, 2024, to close at $119.00 per share on November 20, 2024.

Finally, on February 6, 2025, Elf announced its third quarter 2024 financial results and provided its full year 2025 guidance and revealed that it expected full year 2025 net sales growth to be 27% to 28%, down from the previous guidance of 28% to 30%, and also revised its adjusted EBITDA guidance to $289 million to $293 million, down from $304 million to $308 million, attributed, in part from the updated sales outlook and a $7 million currency loss.  Elf further revealed that its anticipated net sales growth was lowered to (-1%) to 2%, with management explaining that this reflected prudence amid softer consumption trends, challenging category conditions, and slower-than-expected new product performance.  On this news, the price of Elf common stock declined $17.36 per share, or approximately 19.62%, from a close of $88.49 per share on February 6, 2025, to close at $71.13 per share on February 7, 2025.

The complaints allege that, throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material facts about the company’s business, operations, and prospects.  Specifically, Defendants misrepresented and/or failed to disclose that: (1) Elf was experiencing rising inventory levels as a consequence of flagging sales; (2) Elf falsely attributed the rising inventory levels to, among other things, changes in its sourcing practices; (3) to maintain investor confidence, Elf reported inflated revenue, profits, and inventory over several quarters; (4) accordingly, Elf’s business and/or financial prospects were overstated; (5) all of the foregoing, once revealed, would likely have a material negative impact on Elf; and (6) as a result, Defendants’ statements about the company’s business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.
 

What is a Lead Plaintiff?

A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case.  Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.