e.l.f. Beauty(ELF) Soars 1.35% on Q1 Revenue Growth, Acquisition

e.l.f. Beauty(ELF) rose to its highest level since February 2025 today, with an intraday gain of 1.35%.

The strategy of buying ELF shares after they reached a recent high and holding for 1 week yielded moderate returns over the past 5 years. The total return on investment (ROI) was 403.18% from May 2020 to May 2025, significantly outperforming the market. This indicates that the strategy of investing in ELF after its highs can be lucrative, although it is essential to note that past performance is not indicative of future results.

Recent High Performance: ELF shares reached a high of $13.46 on May 28, 2025. Purchasing the stock at this price and holding it for 1 week resulted in a 3.6% year-on-year growth in revenue and an 8.3% beat on non-GAAP profit in Q1 CY2025. This suggests that the strategy can be profitable in the short term, as the company's performance post-high purchase price was strong.

Long-Term Performance: Over the 5-year period, the strategy yielded a total return of 403.18%. This is a substantial return, indicating that the long-term performance of the strategy is also robust. ELF's net sales increased by 28% for fiscal 2025, with a compounded annual growth rate (CAGR) of 49.6% over the last three years. This underlying growth in the company's sales and market share gains supports the long-term returns of the strategy.

Market Reaction to Acquisitions: The acquisition of Hailey Bieber's beauty brand, Rhode, for up to $1 billion is a significant move that could impact future performance. While the acquisition is expected to close in the second quarter of fiscal 2026, it presents both opportunities and risks for the company's future growth. The market's reaction to the news of the acquisition, with a 14.4% plunge in share price, suggests that investors may have concerns about integration risks and the price tag of the acquisition.

In conclusion, the strategy of buying ELF shares after they reach a recent high and holding for 1 week has shown promising returns over the past 5 years, with substantial total returns. However, investors should consider the potential impact of market conditions, company performance, and strategic acquisitions on the future performance of the strategy. The acquisition of Rhode, for instance, could either enhance or potentially dilute the company's future growth, depending on how well the brand is integrated and how successful the company is in executing its vision with Rhode.

E.l.f. Beauty's stock price has been influenced by several recent developments. The company reported better-than-expected revenue in the first quarter of calendar year 2025, with sales increasing by 3.6% year-on-year to $332.6 million. This strong financial performance is likely to have a positive impact on the company's stock price, as it demonstrates the company's ability to generate revenue growth in a competitive market.

In addition to its strong financial performance, e.l.f. Beauty announced a $1 billion acquisition deal for Hailey Bieber's skincare brand, Rhode, on May 28, 2025. This acquisition aims to expand e.l.f. Beauty's reach to higher-income shoppers and diversify its portfolio with a fast-growing brand. Hailey Bieber will continue her role as founder and serve as chief creative officer and head of innovation. This strategic move is expected to further boost the company's stock price, as it positions e.l.f. Beauty to capture a larger share of the growing skincare market.