Why Elf Beauty Shares Have Fallen This Week

Stocks of the cosmetics and skin care company elf Beauty (ELF -2.12%) is down 12% in the past week as of 3:30 p.m. ET Thursday, according to data from S&P Global Market Intelligence.

After the company guided for sales growth of just 25% to 27% in 2025 — down from 77% in the past year — the market has priced elf Beauty’s stock down as it worries about slowing growth rates.

Making matters worse, data from SPINS and IRI on consumer goods showed that credit card spending growth with elf for the four weeks ending August 11 slowed to 18%, pointing to the potential for a continued slowdown.

Can elf Beauty grow in its rating?

Thanks to its share price rising more than fivefold in the past three years as the company’s sales have tripled, elf Beauty commands a valuation of 72 times earnings. This premium valuation means the market is seriously ramping up its expectations for elf, which is why it reacted so negatively to recent credit card data.

To put this price-to-earnings (P/E) ratio into perspective, elf Beauty would need to deliver 21% earnings growth over five years to match S&P 500Average P/E ratio of 27.

However, elf Beauty may be worth this projected growth.

A recent one Piper Sandler The survey found that 38% of teenagers believe Elf Beauty is the top cosmetics brand, indicating that the company could have decades of growth ahead. For further context, the next four most popular brands combined account for just 24% of the vote, highlighting elf dominance.

If elf Beauty were to defend that leadership position among young consumers — as Piper Sandler believes after reiterating its buy rating — its shares could bounce back higher, but investors should remain prepared for further volatility .