Carson Block of Muddy Waters claims e.l.f. Beauty has "materially overstated revenue" by $135 million to $190 million in recent quarters, suggesting serious integrity issues.
Block asserted, "We believe that in Q2 FY24, e.l.f. management realized its growth narrative was in trouble as its inventory built; inflated revenue reporting started thereafter."
According to Block, e.l.f. caused its inventory growth by taking allegations of increased inventory sourcing practices at face value— "We understand that e.l.f.'s longstanding general practice was to take title to goods on the China side."
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