Is e.l.f. Beauty’s (ELF) AI Pivot Offsetting Softer Q4 Demand In Its Growth Story?

• In early December 2025, e.l.f. Beauty used the Morgan Stanley Global Consumer & Retail Conference to caution that Q4 organic sales growth could slip below its prior 2%–5% range amid softer U.K. demand, while also outlining how AI is reshaping its digital and marketing approach.
• Alongside this more cautious near-term outlook, management’s push to overhaul content for AI-driven search and shopping highlights how e.l.f. is trying to future‑proof its brand engagement model.
• We’ll now explore how this more cautious Q4 organic sales outlook may alter e.l.f. Beauty’s previously upbeat investment narrative.

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e.l.f. Beauty Investment Narrative Recap

To own e.l.f. Beauty, you need to believe its value-focused, digital-first brands can keep winning share even as tariffs, competition and heavier spending weigh on margins. The softer U.K. backdrop and risk of negative Q4 organic sales mostly affect sentiment around the key near term catalyst: whether management can stabilize growth while integrating Rhode and absorbing higher costs. For now, that Q4 caution looks more like a bump than a reset of the long term story.

The company’s push to overhaul content for AI-driven search and shopping feels most relevant here, because it ties directly into its core growth engine: low-cost, high-impact digital marketing. As e.l.f. leans into contextual AI and campaigns like “Change the Board Game,” the immediate question for investors is whether this spending can offset softer U.K. demand and higher tariffs by keeping customer acquisition efficient and brand engagement high.

Yet against this upbeat AI and brand engagement story, investors should be aware of the mounting tariff and China supply chain risk...

Read the full narrative on e.l.f. Beauty (it's free!)

e.l.f. Beauty's narrative projects $2.3 billion revenue and $294.5 million earnings by 2028. This requires 19.1% yearly revenue growth and about a $196.7 million earnings increase from $97.8 million today.

Uncover how e.l.f. Beauty's forecasts yield a $121.71 fair value, a 50% upside to its current price.

Exploring Other Perspectives

Twelve members of the Simply Wall St Community place e.l.f. Beauty’s fair value between US$96.94 and US$155.45, highlighting how far apart individual views can be. Set that against the current concern over tariff exposure and China-centric sourcing, and it becomes even more important to weigh several alternative viewpoints on where margins and cash flows could land.

Explore 12 other fair value estimates on e.l.f. Beauty - why the stock might be worth as much as 91% more than the current price!

Build Your Own e.l.f. Beauty Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your e.l.f. Beauty research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.
• Our free e.l.f. Beauty research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate e.l.f. Beauty's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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