Gabby Jones, Bloomberg via Getty Images
The Key Takeaways
- E.l.f. Beauty called claims that it overstated its revenue meritless and said it "was fully confident in our financial statements."
- The beauty brand's statements come after the short-seller, Muddy Waters, alleged it had inflated its revenues for three quarters.
- E.l.f.'s stock prices plunged after Muddy Waters' allegations on Wednesday, but have since recovered.
E.l.f. Beauty Inc. (ELF), a cosmetics company, has called a short seller’s report a waste of time, a day after Muddy Waters research, its publisher, accused it of exaggerating its revenue.
Muddy Waters, in its report, claimed that e.l.f. e.l.f. exaggerated their revenue by up to $190 million in the last three quarters. The write-up claimed e.l.f.—which imports most of its products—reported rising revenues and inventory levels at the same time as it was importing far fewer products.
"To sell something, you have to actually have it," Muddy Waters CIO Carson Block told CNBC.
E.l.f.’s stock price rose Thursday after the company issued a statement saying that Muddy Waters’ claims had no merit and that it was "fully confident in our financial statements." Recent gains of about 4% were seen in the shares, bouncing back from intraday Wednesday lows.
Muddy Waters, a beauty brand, said that it had asked U.S. Customs and Border Protection in early 2024 to keep its data on imports confidential. “does not include a substantial majority of our actual U.S. imports.”
“Muddy Waters has made numerous inaccurate statements about e.l.f. Beauty and our business by relying upon incomplete data and flawed assumptions, omitting critical context, and presenting speculation as fact," the cosmetics company said in its statement.
E.l.f. Shares are down 14% so far this year.
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