e.l.f Beauty (ELF) has entered into a definitive agreement to acquire model-turned-entrepreneur Hailey Bieber’s Rhode make-up brand for $1 billion, in a push to diversify its supply chain beyond China. The cash-and-stock deal includes $600 million in cash and $200 million in e.l.f Beauty’s common stock payable upon closing. Additionally, ELF will pay a further $200 million based on Rhode’s growth over the next three years. Following the news, ELF stock popped 3.2% in after-hours trading yesterday.
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The deal is expected to close in the second quarter of e.l.f Beauty’s fiscal year 2026, later this year. Post the acquisition, ELF’s Sephora stores will start selling Rhode’s products. Bieber will take on the role of Rhode’s chief creative officer and head of innovation, and will also serve as a strategic advisor to the combined company.
e.l.f Sees Strategic Synergies with Rhode Brand
This acquisition marks e.l.f. Beauty’s largest to date. CEO Tarang Amin noted that both brands are highly popular among the Gen Z consumers. Rhode boasts a limited but popular line of cosmetics and skin-care products, which are mostly produced in Europe, the U.S., and other parts of Asia. In just three years since its inception, Rhode has grown into a multi-million-dollar company. For reference, Rhode generated sales of $212 million for the fiscal year ended March 31, 2025.
Importantly, the acquisition will help ELF shift its supply chain outside of China, where 75% of its products are currently manufactured. ELF’s products attract 55% tariffs on imports from China. To mitigate the impact of these tariffs, the company has announced a $1 price increase across its products, to be effective on August 1. e.l.f is also seeking to dive deeper into the skin-care product line, in alignment with this acquisition. While e.l.f.’s starting price point is about $6.50, Rhode appeals to a more premium audience, with a $20 entry point. Thus, this acquisition brings in a different consumer set for the beauty store.
e.l.f. Beauty Surpasses Q1 Earnings
e.l.f. Beauty also reported its fourth-quarter fiscal 2025 results after the markets closed yesterday. Adjusted earnings per share (EPS) of $0.78 easily beat the consensus of $0.72. Moreover, net sales rose 4% year-over-year to $332.65 million, and surpassed analysts’ estimates of $326.67 million.
Meanwhile, for full year fiscal 2025, net sales jumped 28% over FY24, and the company gained 190 basis points of market share in the U.S., as noted by Amin. Unfortunately, the company did not provide any guidance for fiscal 2026 “due to the wide range of potential outcomes related to tariffs.” Additionally, Amin mentioned that the company paid more than 145% in taxes before President Trump agreed to cut the tariffs on Chinese goods. However, those costs did not reflect in the March quarter but will show up in the first quarter fiscal 2026 results.
Is ELF Stock a Buy Right Now?
Ahead of the Q4 print, analysts remained highly optimistic about ELF’s long-term stock trajectory. On TipRanks, ELF stock has a Strong Buy consensus rating based on 10 Buys and two Hold ratings. Also, the average e.l.f. Beauty price target of $85.82 implies 5.2% downside potential from current levels. Year-to-date, ELF stock has lost 27.9%.
Please note, these ratings could change once analysts revisit their recommendations following the Q4 results and Rhode’s acquisition news.
