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Published April 10, 2025
There’s no putting lipstick on this one: Elf Beauty faked its financials and shareholders are furious. After a shortseller report revealed the cosmetics manufacturer lied about inventory levels, investors dumped their shares, causing Elf’s stock price to take a hit. Now, some of those investors are taking legal action.
In 2023 to 2024, Elf’s executives posted rosy financials, consistently showing over 70% sales growth. At the same time, Elf’s CFO admitted the Company’s inventory ballooned but said this was because demand increased. She said inventory levels were “appropriate.”
The lawsuit says that was lie.
A November 2024 shortseller report discovered Elf overstated its revenue for at least three quarters. It also found out Elf hadn’t intended for the inventory build-up and the excess inventory hurt Elf’s bottom line. So, Elf executives reported fake revenue figures to help smooth out the hit taken from the inventory build-up.
Once investors learned the truth, Elf’s stock price dropped. Some investors are now joining the lawsuit.