ELF Stock Plunges 25%: TikTok Uncertainty Dampens Beauty Chatter

Shares of e.l.f. Beauty (ELF) took a nosedive on Thursday, plummeting over 25% in extended trading after the company reported financial results for its third quarter of 2025. The cosmetics giant's stock price fell to lows not seen since 2023, leaving investors wondering what went wrong. Let's dive into the key takeaways and explore the factors contributing to this significant stock price decline.

Key Takeaways:

* e.l.f. Beauty reported strong Q3 financial results, with net sales up 31% year over year to $355 million, surpassing analyst expectations.
* Despite the robust sales growth, the company's stock price tumbled following a reduction in its full-year guidance, citing softer-than-expected sales trends in January.
* The uncertainty surrounding TikTok's future and the impact on beauty chatter, combined with other factors, contributed to the stock price decline.



TikTok Uncertainty and Beauty Chatter:

The uncertainty surrounding TikTok's future has had an impact on the overall beauty category and specifically, e.l.f. Beauty's sales trends. According to e.l.f. Beauty's CEO, Tarang Amin, the mass cosmetics category declined by 5% in January, which was driven by two factors: a hangover from holiday discounting and a slowdown in social commentary, or fewer people talking about beauty online. The uncertainty around TikTok's future, along with the LA wildfires, led to a decrease in social conversation around beauty, which can drive cosmetics sales. This uncertainty, combined with the slowdown in social commentary, contributed to the softer sales trends that e.l.f. Beauty experienced in January.

Other Factors Contributing to the Stock Price Decline:

In addition to the TikTok uncertainty and beauty chatter, other factors may have contributed to e.l.f. Beauty's stock price decline:

1. Holiday discounting hangover: Consumers may have stocked up on products during the promotional December period, leading to softer sales in January.
2. New product launches: Initial reads for a couple of new product launches for spring 2025 started off slower than expected, potentially impacting sales.
3. Tough prior-year comparisons: The company may be facing challenging comparisons to strong sales performance in the same period last year.

Looking Ahead:

Despite the recent stock price decline, e.l.f. Beauty remains confident in its ability to deliver market-leading growth. The company is focused on four areas with significant runway for growth: digital, color cosmetics, skincare, and international expansion. As the company works through these headwinds, investors will need to be patient and monitor the progress in these key growth areas.

In conclusion, the uncertainty surrounding TikTok's future, combined with other factors, contributed to e.l.f. Beauty's stock price decline. However, the company's strong financial performance and growth prospects suggest that this may be a temporary setback. Investors should closely monitor the company's progress in its key growth areas and remain patient as it navigates these headwinds.