The case—Rottman v. E.l.f. Beauty, inc. et al—was filed on March 6 following a report by investment research firm Muddy Waters which was published in November 2024.
E.l.f. Beauty recorded a $36.9 million increase in inventory in Q2 FY24, attributing changes to its sourcing practices.
The 48-page report by Muddy Waters claimed that e.l.f. Beauty’s reported inventory levels were not equivalent to its revenue figures. According to the report, e.l.f. Beauty “materially inflated” its inventory to account for unreceived revenue.
With that, e.l.f. Beauty strongly refuted the claims, stating that Muddy Waters had relied on “incomplete data and flawed assumptions” and had omitted key context.
The short seller estimated that e.l.f. had overstated its revenue by between $135 million and $190 million.
Having filed a confidentiality request with US Customs and Border Protection in early 2024, a significant portion of the brand’s important data was not publicly available.
Rottman v. E.l.f. Beauty, inc. et al. seeks to recover losses for investors who were negatively affected by the alleged misrepresentation.
The class action lawsuit includes investors who purchased shares between November 1, 2023, and November 19, 2024.
According to the law firms involved in the case, investors have until May 5, 2025, to request appointment as lead plaintiff in the case.
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