Following a short seller’s allegation that E.l.f. Beauty overstated its revenue in earnings reports, a class-action lawsuit has been filed on behalf of shareholders.
Filed Mar. 6, the case Rottman v. E.l.f. Beauty, Inc. et al accuses the company, CEO Tarang Amin and CFO Mandy Fields of reporting “inflated revenue, profits, and inventory over several quarters.” Court documents cite a November 2024 report by short seller investment firm Muddy Waters arguing that inventory import levels did not correlate with reported revenue. The class includes anyone who bought shares of the company between Nov. 1, 2023 and Nov. 19, 2024.
“We believe the allegations are meritless and look forward to establishing that through the legal process,” an E.l.f. Beauty spokesperson responded.
In its fiscal third-quarter earnings report on Feb. 6, E.l.f. Beauty reported 40 percent net sales growth for its 2025 fiscal year to date, noting that consumption was “softer than expected.” Share prices were at $69.63 as of the afternoon of Mar. 7, up from $64.42 on Mar. 6 and down from a 2025 peak of $133.91 on Jan 16.
The lawsuit cites Muddy Waters’ estimate that E.l.f. Beauty inflated its revenue by $135 million to $190 million based on claims of excess inventory levels. In November, E.l.f. Beauty responded that the short seller’s report contained “incomplete data and flawed assumptions, omitting critical context, and presenting speculation as fact,” stating that a confidentiality agreement filed with US customs authorities meant that publicly available import data does not show the majority of actual imports.
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E.l.f Beauty Shares Drop Following Short Seller Report
Short sellers Muddy Waters’ Carson Block said in a conference in London on Wednesday that he was shorting the stock due to concerns over revenue and inventory.
