What Happened?
Shares of cosmetics company e.l.f. Beauty (NYSE:ELF) fell 32.6% in the morning session after the company reported mixed third-quarter 2025 results and issued a disappointing financial outlook.
While its adjusted earnings per share of $0.68 beat expectations, revenue of $343.9 million fell short of analysts' estimates. The main concern for investors, however, was the company's forecast for the full year. Management's guidance for revenue of $1.56 billion and adjusted EBITDA of $304 million, at their respective midpoints, came in significantly below Wall Street's projections. Adding to concerns, the company's operating margin fell to 2.2% from 9.3% in the same quarter last year. The combination of a revenue miss and a weak forecast that implied slowing growth and profitability prompted a negative reaction from investors.
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What Is The Market Telling Us
e.l.f. Beauty’s shares are extremely volatile and have had 48 moves greater than 5% over the last year. But moves this big are rare even for e.l.f. Beauty and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 10 days ago when the stock gained 2.8% on the news that optimism surged over a potential trade truce between the U.S. and China. Reports of progress in trade negotiations ahead of a scheduled meeting between the two nations' presidents fueled investor confidence. An agreement would likely ease trade tensions and reduce or remove tariffs that have created economic uncertainty and higher costs for many multinational corporations. Also, optimism improved on expectations that the Federal Reserve will cut interest rates later in the week, especially after recent data showed inflation wasn't heating up as much as expected. Simply put, good news on trade, and the promise of lower borrowing costs created a powerful rally.
e.l.f. Beauty is down 38.3% since the beginning of the year, and at $75.96 per share, it is trading 48.2% below its 52-week high of $146.67 from September 2025. Investors who bought $1,000 worth of e.l.f. Beauty’s shares 5 years ago would now be looking at an investment worth $3,977.
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