e.l.f. Beauty Inc. (ELF) shares tumbled 5.86% in after-hours trading on Wednesday, despite reporting better-than-expected fourth-quarter results. The significant drop comes as the company announced a definitive agreement to acquire Hailey Bieber's Rhode brand in a $1 billion deal and refrained from providing a fiscal 2026 outlook due to tariff uncertainties.

The cosmetics company reported adjusted earnings per share of $0.78, surpassing the IBES estimate of $0.72. Net sales for the quarter reached $332.645 million, beating the expected $327.5 million. Despite these positive results, investors seemed to focus on the Rhode acquisition and the lack of future guidance.

e.l.f. Beauty plans to pay Rhode shareholders $800 million in a combination of cash and stock, with an additional potential earnout of $200 million subject to performance conditions. While this acquisition marks e.l.f.'s entry into the prestige beauty market, the high price tag may have raised concerns among investors about the deal's impact on the company's financials. Adding to these worries, e.l.f. Beauty announced it would not provide a fiscal 2026 outlook due to the "wide range of potential outcomes related to tariffs," highlighting ongoing uncertainties in the business environment.