A class action lawsuit has been filed against E.LF Beauty on behalf of shareholders, claiming the company overstated its revenue in earnings reports.

The lawsuit, filed on March 6th, accuses the company, CEO Tarang Amin and CFO Mandy Fields of reporting “inflated revenue, profits, and inventory over several quarters,” and falsely attributing rising inventory levels to, among other things, changes in its sourcing practices when, in fact, the rising inventory levels were the result of flagging sales.

The lawsuit cites a November 2024 report from Muddy Waters Research claiming that the Company had materially overstated revenue over the past three quarters.

Founded in 2004 by Joseph Shamah and Scott Vincent Borba, Oakland based E.L.F -that stands for eyes-lips-face – offers high quality beauty products at affordable prices. An early digitally native brand, it has successfully used social media to propel itself into a major cosmetics player both in the U.S and abroad.

“Muddy Waters’ latest report is an attempt by a noted short seller to negatively impact e.l.f. Beauty’s share price for its own benefit and at the expense of all other e.l.f. Beauty shareholders,” the company stated back in November when the report was first released.