Robbins LLP is Investigating Allegations that e.l.f. Beauty, Inc. (ELF) Misled Investors and Overstated its Profits

Robbins LLP informs stockholders that a class action was filed on behalf of all investors who purchased or otherwise acquired e.l.f. Beauty, Inc. (NYSE: ELF) securities between November 1, 2023 and November 19, 2024. e.l.f., together with its subsidiaries, provides cosmetic and skin care products under the e.l.f. Cosmetics, e.l.f. Skin, Well People, Naturium, and Keys Soulcare brand names.

The Allegations

According to the complaint, during the class period, defendants failed to disclose to investors that: (i) the Company was experiencing rising inventory levels as a consequence of flagging sales; (ii) e.l.f. falsely attributed the rising inventory levels to, among other things, changes in its sourcing practices; (iii) to maintain investor confidence, e.l.f. reported inflated revenue, profits, and inventory over several quarters; (iv) accordingly, the Company’s business and/or financial prospects were overstated; and therefore (v) the foregoing, once revealed, would likely have a material negative impact on the Company.

On November 20, 2024, Muddy Waters Research published a report entitled “e.l.f. Beauty, Inc. A Revenue and Inventory Mystery”, alleging that e.l.f. had “materially overstated revenue over the past three quarters,” and that in “Q2 FY24, ELF management realized its growth narrative was in trouble as its inventory built.  It appears that ELF then began reporting inflated revenue and profits.  Its reported inventory also appears materially inflated as a result - i.e., to account for cash that has not really come in.” Further, Muddy Waters accused the Company of concealing its inventory challenges from investors by falsely attributing its rising inventory levels to supposed changes in its sourcing practices rather than the true cause—insufficient sales.

On this news, e.l.f.’s stock price fell $2.71 per share, or 2.23%, to close at $119.00 per share on November 20, 2024. e.l.f.'s stock has continued to decline. On March 5, 2025, e.l.f.'s stock closed at $64.67 per share, representing a decline of $57.04 per share – or nearly 47% - since the truth was revealed.

What Now: You may be eligible to participate in the class action against e.l.f. Beauty, Inc. Shareholders who want to serve as lead plaintiff for the class must file their papers with the court by May 5, 2025. A lead plaintiff is a representative party who acts on behalf of other class members in directing the litigation.  You do not have to participate in the case to be eligible for a recovery. If you choose to take no action, you can remain an absent class member.