Short sellers target companies for all sorts of reasons, from their stock being potentially overvalued to management allegedly making false statements. In this case, it's the latter.
At the 2024 Sohn London Conference this week, Carson Block of Muddy Waters presented his short of discount cosmetics brand E.L.F Beauty, accusing the company of making a false statement and inflating some key numbers.
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He noted that all the company's products are manufactured in China. As of the most recent fiscal quarter, sales of those products in the U.S. accounted for about 80% of the company's overall revenue.
Apparent contradiction?
Calling attention to a correlation between E.L.F.'s sales and imports, Block said that imports cratered somehow, although sales did not.
