E.l.f. Soars After $1 Billion Pow(d)er Move to buy Hailey Bieber’s Rhode
At less than three years old and with just ten products, Rhode is a rocket ship with $212 million in net sales last year.
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Haley Bieber has the face that launched a thousand beauty trends — from latte makeup to glazed donut skin and other looks that sound like they’re straight off a Starbucks menu. A few years ago, Bieber began using her star power for her own brand, Rhode.
E.l.f. Beauty’s stock jumped 24% yesterday after the company announced it would acquire Bieber’s skincare and makeup startup in a $1 billion deal consisting of $600 million in cash and $200 million in shares, plus a potential $200 million results-based bonus to sweeten the pot.
Cashing in on the Clean Girl Aesthetic
At less than three years old and with just 10 products, Rhode is a rocket ship. It garnered $212 million in net sales last year and doubled its customers. Sephora said last week it would start carrying Rhode at stores in the US, UK, and Canada.
Rhode is E.l.f.’s biggest acquisition so far as it looks to push beyond budget buyers:
- Both E.l.f. and Rhode are favorite brands among Gen Z TikTokers. But while E.l.f. goes viral for budget-friendly “dupes,” like a Dior-ivative $8 lip oil, Rhode sells premium products, like a $40 lip peptide treatment. E.l.f. could capture more of the market by buying Rhode, hoping that customers concerned about the economy will either trade down to buy its namesake line or splurge on the high end.
- While E.l.f. beat analysts’ sales and profit estimates last quarter, the company told investors earlier this year that it’s seeing cooling demand across the beauty market. Last week, E.l.f. said it’ll have to raise prices by $1 (a big jump for $3 eyeliner) to offset tariffs in China, where 75% of its products are made.
Time for a Touch-up. As Big Beauty braces for tariffs, smaller brands like Rhode are proving resilient. Dealmaking has sputtered since the years around 2020, when brands like Deciem/The Ordinary and Kylie Cosmetics were scooped up. But E.l.f.’s buy could inspire more deals in the sector — a new wave of celeb-backed beauty brands could be attractive buys (or go public), including Selena Gomez’s Rare Beauty and Emily Weiss’s Glossier. Tapping brands that come with built-in fan bases could protect beauty’s biggest companies.
