(MENAFN- AsiaNet News)

• After withdrawing in May, e.l.f Beauty issued guidance for FY 2026 sales and adjusted profit, which came in below analysts' targets.
• The company reported Q2 net sales, which were also lower than expectations, but profit came in higher.
• Stocktwits sentiment for ELF shifted to 'extremely bullish' from 'bearish' as the stock dropped over 20% in the after-market session following the earnings report. 

 

Shares of e.l.f. Beauty, Inc. plunged 21.25% in the after-hours session on Wednesday, and trended on Stocktwits, after the cosmetics giant guided fiscal 2026 performance below Wall Street's expectations and reported mixed quarterly results.

If the move holds in Thursday's session, it would be the stock's worst performance since March 2020. 

Forecast Disappoints

Notably, the company withdrew its 2026 forecast in May due to the evolving tariff situation. CEO Tarang Amin said that between then and now, analysts' projections could have wavered easily,“but we're very proud of the guidance we are issuing.”

The beauty giant forecast adjusted EPS of $2.80 to $2.85 and sales of $1.55 billion to $1.57 billion for the year ending March 2026. That's way below the analysts' average targets of adjusted EPS of $3.53 and revenue of $1.65 billion.

The weak guidance highlights the impact of increased competition from companies like Spehora, as well as broader weakness in beauty product sales, amid cautious consumer spending in response to high inflation and economic uncertainty. While the key Chinese market is rebounding, beauty sales in the U.S. remain soft, according to anecdotal data.

“I think everyone's still worried about the American consumer,” Amin said.“There's so much uncertainty on inflation, on tariffs, but what I would tell you is consumers are being choosy, but they're choosing E.l.f.”

Elf Beauty anticipates incurring more than $50 million in costs due to higher U.S. tariffs on imports in fiscal 2026. China accounts for approximately 75% of the cosmetics maker's global production.

Q2 Performance Mixed

In the second quarter, the company's net sales increased 14% to $343.9 million, but missed analysts' expectations of $365.8 million. Amin stressed the company's milestone of“consistent, category-leading growth we've delivered over the past 27 quarters,” and said its namesake e.l.f. brand gained market share by 140 basis points. 

The company's results were also boosted by its acquisition of Hailey Bieber's cosmetics and skin-care line, Rhode, which closed in August. The brand has rapidly gained shelf space after launching in Sephora's North America stores in September, and will roll out to locations across the U.K. next week, Amin said.

Adjusted EPS in the quarter was $0.68, ahead of estimates of $0.57. Notably, the company increased prices across products by an average $1 in August.

What Is Retail Investors' View?

On Stocktwits, the retail sentiment for ELF shifted to 'extremely bullish' as of late Wednesday, up from 'bearish' the previous day, with 24-hour message volume rising a whopping 4,675%.

ELF sentiment and message volume as of November 5 | Source: Stocktwits

“$ELF panic sellers = panic buyers tomorrow,” a user remarked, summarizing the mood of the retail investor community, with another one saying they started a long-term position in the stock.

“$ELF last earnings this went from $110 down to $95, 10 days later it was $117, hopefully the same thing happens this go around, earnings weren't that bad, the company, if doing well considering the economic and tariff issues,” said a user.

As of the last close, ELF stock has declined 6.2% year to date. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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