e.l.f.(US:ELF) Benzinga·2025-11-06 20:21Core Insights - E.l.f. Beauty Inc's stock has experienced a significant decline, dropping 29% on Wednesday and an additional 36% on Thursday, impacting related consumer and retail ETFs [1][2][3] - The company's recent earnings report revealed an 84% drop in net income due to increased costs from tariffs, leading to a decline in gross margin and necessitating a price hike across its products [4][5] - Valuations for E.l.f. remain high at around 70 times forward earnings, raising concerns among analysts about the sustainability of its growth amidst margin pressures [6][7] ETF Impact - The iShares U.S. Consumer Goods ETF (IYK), which includes major companies like Procter & Gamble and Estee Lauder, has seen a slight decline as E.l.f.'s tariff issues raise concerns about margins across the sector [2][5] - The VanEck Retail ETF (RTH) and SPDR S&P Retail ETF (XRT) are also affected, with RTH down 1.2% and XRT down 3% as inflation and tariffs threaten consumer spending [3][5] - The situation highlights the vulnerability of ETFs with exposure to consumer goods and retail sectors, as many brands rely on global supply chains that could be impacted by ongoing tariff issues [5][6] Market Sentiment - Analysts from TD Cowen, UBS, and Piper Sandler have revised price targets and ratings for E.l.f., indicating a slowdown in core business growth despite the success of its Hailey Bieber-backed brand [6][7] - The episode serves as a cautionary tale for ETF managers, emphasizing that high-growth narratives can quickly turn into liabilities for portfolios [7]