Short-seller Muddy Waters Research announced on November 20, 2024, that it has taken a short position in e.l.f. Beauty. The hedge fund's chief executive, Carson Block, made the announcement at the Sohn conference in London.
Muddy Waters alleged that e.l.f. Beauty had 'materially overstated revenue over the past three quarters' by approximately $135 million to $190 million. The report also claimed that the company began reporting inflated revenue and profits in the second quarter of fiscal year 2024 to conceal declining growth.
Furthermore, Muddy Waters asserted that e.l.f. Beauty's reported inventory appeared materially inflated, suggesting it was used to account for cash that had not actually been received. These allegations led to a decline in e.l.f. Beauty's stock price.
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