Elf beauty is a cosmetics company that started out in 2004 selling cruelty free and affordable cosmetic products. The company sells its products through bricks and mortar stores as well as its website which doubles as a social networking hub of nearly 2 million users. On September 22nd, the company will offer 8.3 million shares with the intention of raising approximately $150m on the NYSE. The company has been experiencing a significant amount of growth over the years but the question remains for investors is whether investing in the E.L.F. Beauty Trend will yield portfolio returns. As per S-1 filings, the company has reported that nearly 50% of sales are made through the corporate website. We’ll look to Google Trends to give us an idea of the amount of internet traffic that is searching for the brand and gauge general brand interest.
TREND VS FINANCIAL PERFORMANCE
Before we go into detail about the search trends, let’s have a look at financial performance. From a revenue standpoint, the company has grown substantially:
While revenue growth is on the upside, the company has indicated that they feel there is greater penetration possibility in existing store locations as well as through conversions of online sales. Judging by the search trend for ELF Beauty and ELF Cosmetics isolated for searches in the US (Since this is where it does most of its business), we would be inclined to agree with the company’s statement as both trends are moving in a positive direction. Furthermore, when compared against 4 of the largest cosmetics companies operating in the US, we note that ELF Beauty is quickly approaching in terms of nominal search growth and happens to be one of the only brands that has a positive search trend growth.
With the markets looking the way they are and with growth companies becoming more and more scarce, we consider ELF Cosmetics IPO to be a very much welcomed IPO offering investors the possibility of portfolio growth. We will definitely be keeping an eye out on this IPO as well as its search trend.