What Happened?
Shares of cosmetics company e.l.f. Beauty (NYSE: ELF) jumped 6.7% in the morning session after strong earnings from retailer Kohl's highlighted robust consumer spending in the beauty sector.
Kohl's reported second-quarter adjusted earnings that nearly doubled analyst expectations, causing its stock to soar. The department store giant attributed much of its success to its partnership with beauty retailer Sephora, which has now been rolled out to all of its locations. Kohl's noted that its beauty sales have surged, positioning the company to build a $2 billion beauty business. This positive news from a major retailer suggests strong underlying demand for cosmetic and skincare products, which is likely boosting investor confidence in specialized beauty companies like e.l.f. Beauty.
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What Is The Market Telling Us
e.l.f. Beauty’s shares are extremely volatile and have had 48 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock dropped 4.5% on the news that markets continued to decline, as investors grew cautious ahead of a key speech by Federal Reserve Chair Jerome Powell.
The move came as U.S. equity markets recorded a fifth consecutive day of losses for major indexes like the S&P 500, with technology stocks experiencing the largest declines. Investors have grown wary that the sharp rally in the tech sector since April may have advanced too far. The market-wide caution is largely driven by the upcoming Jackson Hole symposium, a meeting of central bankers, where traders are anxiously awaiting Fed Chair Powell's speech on Friday for guidance on the future path of interest rates.
e.l.f. Beauty is down 0.7% since the beginning of the year, and at $122.16 per share, it is trading 20.3% below its 52-week high of $153.32 from August 2024. Investors who bought $1,000 worth of e.l.f. Beauty’s shares 5 years ago would now be looking at an investment worth $6,522.
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