By Chantal Marx
e.l.f. Beauty was founded in June 2004 by Joseph Shamah and Scott Vincent Borba in New York City, aiming to provide high-quality, vegan, cruelty-free cosmetics for as little as $1. Originally a direct-to-consumer online brand, it quickly gained popularity and expanded into major retail, later pivoting to "duping" under CEO Tarang Amin, who joined the business in 2014. Under its flagship e.l.f. brand, the company now mainly produces high-performance, superior-quality products (often imitating popular prestige products) and sells them at reasonable prices.
The mission of the company is to make the best of beauty accessible to every eye, lip and face (e.l.f.). The company's average unit selling price is ~$7.50, lower than top "mass" brands average selling price of $9.50 and prestige brands at $30. The company prides itself on its product set being community driven with direct engagement on social media being key in driving development, experimentation and innovation. The business is also dedicated to executing with speed and quality, providing it with a competitive edge over other mass beauty brands, aside from being on cheaper.
The business has also made several acquisitions over the last few years, notably Well People in 2020, Naturium in 2023, and Hailey Bieber's rhode in 2025. The latter made headlines when it was announced, with the price tag of $1 billion raising eyebrows given how young and relatively small the business was at the time of the acquisition. e.l.f. launched its own skin-care brand in 2015 and partnered with singer Alicia Keys to launch Keys Soulcare in 2020.
The approach to acquisitions has generally been careful, with continued founder involvement favoured. In this regard, e.l.f. views itself as an enabler of the founder's vision, dedicated to authenticity rather than just sweating the brand.
e.l.f. Beauty also has a strong ethical drive to deliver clean beauty products that are always vegan, cruelty-free and never tested on animals.
Not in all stores, not in all geographies (yet)
e.l.f. operates mainly in the wholesale channel, distributing its products through Target, Walmart, Ultra Beauty and Amazon in the United States (US); Shoppers in Canada; Superdrug and Boots in the United Kingdom (UK); and selected retailers elsewhere. Direct- to-consumer is online only. The company recently began selling e.l.f. brands in premium global beauty specialist retailer Sephora, who currently has an exclusive wholesales relationship with the rhode brand. The e.l.f. brands have enjoyed notable early success since it launched its products in Sephora. This new distribution partnership will also help the company expand its reach into more countries globally.
The company's main markets outside of the US are the UK and Canada but it has a small and growing presence in certain European markets and more recently Australasia and Gulf Cooperation Council countries (via Sephora). International sales make up only a fifth of e.l.f.'s sales and, with market penetration of just 20% outside of the US (versus other major brands at over 75%), presents a significant growth opportunity for the business. As an aside, management has recognised this opportunity as a function of its social media presence - International contributes 20% to sales but 74% of e.l.f.'s social media followers are outside the US.
rhode can be a game changer
In May last year, e.l.f. announced the acquisition of influencer Hailey Bieber's rhode for $1 billion. The market reaction was positive at first and then turned negative when e.l.f. management released detailed rhode financials post its 2Q26 results in September. The financials were decent but cast doubt on the hefty acquisition price. Management clarified that revenue was soft for that specific quarter as new product launches were held back in anticipation of the launch of the range in Sephora towards the end of the reporting period. The rhode launch was ultimately the biggest ever for Sephora, by a notable 2.5 times, despite only 16 stock-keeping units (SKUs) being placed at the time.
rhode is unique in that it has a limited product line and is deeply committed to its mission to produce "one of everything really great". The acquisition was immediately accretive and will be a major contributor for e.l.f. from FY27 onward. The company has sustainably high margins relative to competitors, with room for further expansion.
e.l.f. management has emphasised that with rhode it did not buy a business, but a playbook for launching niche, culturally magnetic brands. Hailey Bieber remains Chief Creative Officer and Head of Innovation for rhode, while also serving as a strategic advisor to e.l.f. Beauty.
Gen Z's beauty basket favours e.l.f.
e.l.f. is the number one beauty brand among Millennials, Gen Z's and Gen Alpha's in the markets where it operates. At its core, however, it is a Gen Z brand. Gen Z is a key focus area for e.l.f. and the beauty industry at large as they favour heavier routines (use more product), show devotion to brands, have a strong moral drive towards ethical, clean beauty and have a healthy appetite for trying new products.
In the US, e.l.f. products were found to be used by 82% of Gen Z respondents in Bloomberg Intelligence's latest beauty consumer survey. This is not surprising given the comparatively lower price point versus other mass brands, the product imitating the best of premium (that will not be affordable for Gen Z consumers), and e.l.f.'s proximity to younger consumers given its social media led marketing and engagement strategies. rhode was also noted as a heavily favoured, aspirational, brand.
Financials
Investment case
Risks
Consensus considerations
Consensus is broadly positive on the stock with 71% of sell-side analysts having a BUY rating on the stock and 29% suggesting investors HOLD the stock. There are no SELL recommendations on e.l.f. The consensus 12-month target price is $111.08, suggesting 34.7% upside from current levels.
Valuation
e.l.f. beauty is trading on a forward PE of 22.8 times, more than one standard deviation below its five-year average rating and in line with peers where it has historically traded at an average 25% premium.
