What Happened?
Shares of cosmetics company e.l.f. Beauty (NYSE: ELF) fell 1.6% in the morning session after Deutsche Bank downgraded the stock to 'Hold' from 'Buy'. The brokerage cited that social media commentary around the makeup company has turned "increasingly critical in recent weeks." Despite the lowered rating, the bank raised its price target on the shares to $128 from a previous $121. However, investors appeared to focus more on the downgrade. The negative sentiment reflects concerns that shifting consumer opinions online could present a headwind for the company's growth.
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What Is The Market Telling Us
e.l.f. Beauty’s shares are extremely volatile and have had 48 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock dropped 3.8% on the news that markets pulled back with the decline concentrated in the tech space as investors engaged in profit-taking following a robust week that saw the S&P 500 hit a new record. Adding to the pressure, new inflation data, specifically the Core PCE, showed an acceleration in July, signaling that rising prices remain a risk despite being in line with expectations. This confluence of factors, including market highs heading into a historically weak September, led to a pullback, with the Nasdaq Composite shedding 1.15%. While the Federal Reserve has hinted at potential rate cuts, the focus on inflation and the jobs market continues to influence investor sentiment.
e.l.f. Beauty is up 1% since the beginning of the year, but at $124.27 per share, it is still trading 11.6% below its 52-week high of $140.63 from December 2024. Investors who bought $1,000 worth of e.l.f. Beauty’s shares 5 years ago would now be looking at an investment worth $6,263.
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