e.l.f. Beauty Inc. (ELF.N) saw its stock price collapse by 40% during the first quarter of 2025, driven by a sharp decline in quarterly revenue and deteriorating gross margins. The drop marks one of the steepest declines in the consumer discretionary sector this year.
- e.l.f. Beauty (ELF.N) stock declined 40% in Q1 2025
- Q4 2024 revenue fell 12% YoY to $187 million
- Gross margin dropped to 58.3% from 62.1% YoY
- Marketing expenses rose 32% year-over-year
- Trading volume spiked to 12 million shares on January 8, 2025
- Analysts now project 15–20% reduction in 2025 revenue guidance
The rapid decline in e.l.f. Beauty's share value began in early January 2025, following the company’s release of its Q4 2024 earnings report, which revealed a 12% year-over-year drop in total revenue to $187 million. This was below analysts' consensus estimate of $195 million, signaling weakening consumer demand in the competitive personal care market. At the heart of the sell-off was a widening gross margin gap—down to 58.3% from 62.1% in the same period last year—due to higher input costs and aggressive promotional activity aimed at clearing excess inventory. The company also reported a 32% increase in marketing expenses as it attempted to regain traction with younger demographics, further eroding profitability. Investors reacted swiftly, with trading volume surging past 12 million shares on January 8, 2025—the highest in over two years. The stock fell from a pre-earnings high of $28.70 to a low of $17.21 within a week. The selloff extended across the broader consumer discretionary sector, affecting peers such as The Ordinary and Pacifica Beauty. Analysts now project a 15% to 20% reduction in full-year 2025 revenue guidance, citing ongoing challenges in e-commerce conversion rates and supply chain inefficiencies. The company has initiated a strategic review of its product portfolio and retail partnerships, but no major turnaround measures have been announced as of early February.