e.l.f. Beauty shifts strategy with acquisition of Hailey Bieber’s premium brand Rhode

The mid-cap cosmetics company e.l.f. Beauty has signed an agreement to acquire Rhode, a skincare brand launched by Hailey Bieber, the wife of singer Justin Bieber. The deal marks a shift in strategy for e.l.f.: It enters the prestige beauty market at a time when the mass-market segment is struggling amid weakening demand, Reuters reports. In premarket trading today, May 29, e.l.f. Beauty stock has jumped 17%.

e.l.f. Beauty has agreed to acquire skincare brand Rhode from model Hailey Bieber and her partners, according to the press release. The deal is valued at $1 billion, with $800 million to be paid upon its closing and up to $200 million contingent on the brand’s sales growth over the next three years. The first payment will include $600 million in cash and about 2.6 million of newly issued e.l.f. shares. The acquisition is expected to close in the second quarter of e.l.f.’s 2026 fiscal year (it is currently the first quarter).

“I've been in the consumer space 34 years, and I've been blown away by seeing this brand over time,” e.l.f. Beauty CEO Tarang Amin told CNBC.

Under the terms of the deal, Hailey Bieber will take on the roles of chief creative officer and head of innovation at Rhode and will act as a strategic advisor to the combined company.

For e.l.f., this acquisition represents a shift in strategy toward the prestige beauty market, Reuters notes. It comes as the company sees weak demand from mass-market customers who are being pressured by persistently high inflation. Still, e.l.f.'s revenue does not yet reflect declining sales, the top line having grown 4% year over year in the last full quarter.

eMarketer analyst Sky Canaves voiced his doubts concerning the premium market’s prospects, calling the deal a “bold move for e.l.f. into premium beauty” while noting that the segment has “lost some of its momentum as a result of consumers buying less or trading down.”

e.l.f. Beauty announced the Rhode acquisition less than two months after Reuters first reported, citing anonymous sources, that Bieber had hired investment banks JPMorgan Chase and Moelis to explore a potential sale.

Hailey Bieber cofounded Rhode in 2022, giving the brand her middle name, as the BBC notes. “In less than three years, they've gone from zero to $212 million in net sales, direct-to-consumer only, with only 10 products. I didn't think that was possible,” said e.l.f. Beauty CEO Amin, as quoted by CNBC.

Rhode’s rapid growth has been driven in part by online buzz, including viral TikToks about the brand’s pocket blush and “peptide lip treatments,” the BBC says. According to CreatorIQ, Rhode’s earned media value (a metric that measures the impact of social media marketing campaigns) soared 366% in 2024 to $248 million, fueled mostly by Bieber’s personal social engagement, writes Vogue Business.

In an interview with Vogue Business, Bieber said that “finding a home for Rhode” felt daunting — before she met the e.l.f. Beauty team. The company’s business model successfully takes advantage of beauty trends, which has driven its rapid growth and development, said Georgy Timoshin, a financial analyst at Freedom Finance Global. In October 2024, Freedom highlighted e.l.f. Beauty as one of two small caps with the potential to grow into the mid-cap or even large-cap segment.

In premarket trading today, e.l.f. Beauty stock has surged almost 18% to $106.50 per share, as of this writing.

According to MarketWatch, the name has 13 “buy” ratings and three “holds” among coverage analysts. Their average target price of $95.31 per share suggests upside of about 5% versus the last closing price of $90.50 per share.