Shares of e.l.f. Beauty Inc. (NYSE: ELF) plummeted 23.64% in pre-market trading on Thursday following the release of its second-quarter earnings report and disappointing annual forecast. The cosmetics maker faced significant headwinds from tariff-related costs and a challenging consumer spending environment.

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 weaker outlook.

The sharp stock decline was primarily driven by e.l.f. Beauty's fiscal 2026 forecast, which came in below Wall Street estimates. The company expects 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 projects 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. Despite these headwinds, Amin expressed confidence in the company's strategy to grow market share and capitalize on future opportunities, highlighting recent market share gains and the successful launch of the newly acquired Rhode brand at Sephora North America.