E.l.f. Beauty Defies Short-Seller Claims, Stock Rebounds Strongly
E.l.f. Beauty refutes allegations of revenue inflation by short-seller Muddy Waters Research, affirming confidence in its financial integrity and seeing a recovery in its stock price.
Key Insights
- E.l.f. Beauty firmly rejects accusations of overstating revenue, maintaining full confidence in its financial disclosures.
- Short-seller Muddy Waters Research alleged that E.l.f. inflated revenues by up to $190 million across three quarters, citing discrepancies in import and inventory data.
- Following initial stock price declines post-allegations, E.l.f.’s shares have rebounded, reflecting investor confidence.
E.l.f. Beauty Inc (ELF) has publicly dismissed a recent report from Muddy Waters Research accusing the company of exaggerating its revenue figures. The cosmetics brand emphasized the baseless nature of these claims and reaffirmed trust in its financial statements.
The contentious report suggested that E.l.f. reported increasing revenues and inventory levels despite importing significantly fewer products, raising questions about the accuracy of its earnings reports.
Carson Block, CIO of Muddy Waters, commented on CNBC, "To sell something, you have to actually have it," highlighting the alleged inconsistencies.
In response, E.l.f. clarified that it requested U.S. Customs and Border Protection to keep its import data confidential starting early 2024, indicating that the data analyzed by Muddy Waters was incomplete and did not represent the majority of the company's actual imports.
The company stated, "Muddy Waters has made numerous inaccurate statements about e.l.f. Beauty and our business by relying on incomplete data and flawed assumptions, omitting critical context, and presenting speculation as fact."
Despite the controversy, E.l.f. shares have gained approximately 4% recently, recovering from earlier losses, although they remain down about 14% year-to-date.
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