E.l.f. Beauty Acquires Hailey Bieber’s Rhode for $1 Billion

New York, NY – E.l.f. Beauty announced on May 29 that it will acquire Hailey Bieber’s skincare line, Rhode, for $1 billion, a substantial investment for such a young brand. Historically, the S&P 500 fluctuates by less than 1% on most trading days, making this acquisition a significant market move.

Kelly Kovack, founder and CEO of BeautyMatter, commented, “The valuation of $1 billion for such a young brand is kind of unheard of. E.l.f. made a statement like, ‘we’re here, we’re a massive acquirer.’ I still think it’s a pretty risky deal, but if it succeeds, it’s a huge win.”

During an earnings call following the acquisition, E.l.f. Chief Financial Officer Mandy Fields expressed optimism, stating, “We’re pleased with what we’re seeing out of Rhode.”

Over the years, celebrity beauty brands have transformed into lucrative ventures. Successful examples include Rihanna’s Fenty Beauty and Selena Gomez’s Rare Beauty. Emma Sandler, a former beauty editor, noted, “There was a huge boom in the celebrity beauty world between 2017 to 2022.”

Despite some celebrities’ brands succeeding, others like Kylie Cosmetics and Lady Gaga’s Haus Labs have faced challenges. David Swartz, a senior equity analyst at Morningstar, remarked, “Sales may be strong to begin with, but they can fall off significantly.”

Jeff Lindquist of Boston Consulting Group emphasized the importance of product durability, adding, “Celebrities are good for awareness but don’t guarantee repeat purchases.” Consumer skepticism, particularly among Gen Z, plays a vital role in brand loyalty.

Rhode, which aligns with Bieber’s popular “clean girl” aesthetic, has already gained traction with Gen Z. Its viral product, a patented phone case that holds peptide lip tints, created a waitlist of 200,000 to 400,000 people. Influencers and public figures have showcased Rhode products, enhancing its appeal.

Madhav Pitaliya, an analyst at Coresight Research, noted that a brand’s success hinges on product performance, celebrity image, and authentic claims. The partnership between E.l.f. and Rhode is viewed as a “synergistic effect” where both parties can enhance their reaches.

Leah Fey, a consumer consultant, expressed excitement about Rhode’s wider market access, mentioning the brand’s presence in physical retailers like Sephora beginning in September. However, not everyone is enthusiastic; Kat Smit, an E.l.f. customer, emphasized her focus on product quality and affordability over celebrity endorsements.

Rhode’s product prices range from $20 to $135, positioned to complement E.l.f’s mass-market appeal. Research indicates a significant growth in the U.S. skincare market, with masstige products fueling this trend.

Social media plays a crucial role in brand discovery. TikTok videos using #RhodeSkin have garnered millions of views, showcasing user routines featuring Bieber’s products. Lindquist attributed much of Rhode’s rapid growth to social media’s ability to promote brands and facilitate consumer research.

Despite the excitement, the beauty industry faces challenges from rising costs and tariffs. E.l.f. recently reported $980.9 million in sales for the nine months ending December 31, 2024. Tariffs pose significant challenges to companies reliant on overseas production.

Kovack described the Rhode deal as a double-edged sword, emphasizing that while celebrity brands bring immediate interest, they must sustain a solid business model post-launch. In Rhode’s case, E.l.f. appointed Bieber as a strategic advisor to maintain focus.

Vogue Business recently reported that E.l.f.’s net sales increased 9 percent year-on-year to $353.7 million in the first quarter of fiscal 2026, indicating a promising outlook for the partnership. However, analysts remain cautious, weighing the potential of star power against the realities of maintaining brand authenticity and success.