e.l.f. Beauty Inc. (ELF) shares plummeted 26.23% in pre-market trading following the release of disappointing second-quarter results and a weaker-than-expected annual forecast. The cosmetics maker faced significant headwinds from tariff-related costs and a challenging consumer spending environment, leading to a sharp decline in investor confidence.

For the second quarter, e.l.f. Beauty reported sales of $343.936 million, falling short of the analyst consensus estimate of $366.430 million by 6.14%. Despite beating earnings expectations with adjusted earnings per share of $0.68 compared to the estimated $0.57, investors focused on the revenue miss and softer outlook. The company's fiscal 2026 forecast came in significantly below Wall Street estimates, projecting full-year net sales between $1.55 billion and $1.57 billion, well below analysts' expectations of $1.65 billion. Additionally, e.l.f. Beauty expects adjusted profit in the range of $2.80 to $2.85 per share, falling short of the $3.58 per share estimate.

CEO Tarang Amin cited ongoing challenges, including over $50 million in annual costs from higher tariffs, as key factors impacting the company's outlook. The lowered guidance also reflects concerns about lower-income shoppers seeking cheaper alternatives in a frugal consumer spending environment. In response to the disappointing results and guidance, several analysts, including those from Piper Sandler, UBS, and Morgan Stanley, cut their price targets for e.l.f. Beauty stock. The average rating among analysts remains a "buy," but the median price target has been adjusted downward to reflect the new challenges facing the company.