e.l.f. Beauty has stabilised after its earnings-day shrug, but the week's data shows a new dynamic taking shape — short sellers are quietly rebuilding positions even as the stock edges higher.
Short interest has reversed course in a meaningful way. The count climbed 11.7% over the past week to 8.0 million shares, equivalent to 13.4% of the free float — a sharp reversal from the steady covering trend that dominated the six weeks before the May 20 earnings print. To put the scale in context: short interest had dropped to roughly 7.15 million shares in the run-up to results, only to rebuild almost entirely back to the mid-April peak levels within days of the release. That is a notable shift. The earlier note filed May 20 flagged covering as the dominant direction; that trend has now turned. Availability has tightened in parallel, dropping from around 170% at mid-month to 93.7% — the tightest reading of the past year. The borrow market remains technically open, but the direction of travel is clear. Cost to borrow has also crept up 25% on the week to 0.59%, still low in absolute terms but the steepest it has been across the 30-day window. None of these individually represents a crisis for short sellers, but together they describe a lending market that is becoming less comfortable by the day.
Options, by contrast, tell a more constructive story. The put/call ratio dipped to 0.68 on Tuesday — about 1.1 standard deviations below the 20-day average of 0.71 — and near the low end of the past year's range. That is a call-skewed positioning profile, suggesting options traders are not loading up on downside protection at current levels. The contrast is worth naming: short interest is being rebuilt in the equity lending market, while derivatives positioning is actually leaning toward upside. The two signals are pointing in different directions.
The analyst community processed the earnings print with a near-uniform downward reset on targets. JP Morgan maintained its Overweight but trimmed to $80 from $85 on May 21. BofA Securities kept Buy but cut to $85 from $93 the same day. Jefferies and Canaccord Genuity both held Buy ratings while reducing targets. Morgan Stanley and Piper Sandler, already on the sidelines with Neutral-equivalent ratings, cut further — Morgan Stanley to $59, Piper to $50. Then on May 26, B. Riley cut its target all the way from $130 to $70, the most aggressive reset of the group. The consensus mean now runs at $72.40 against a closing price of $54.13, implying roughly 34% return potential on paper. The bulls' case rests on international door expansion, strong foundation and eye category share gains, and the easier second-half comparatives. Bears point to the continued deterioration in the cheek category — now at a 31% share low — as evidence that competitive pressure is not abating. With the ORTEX short score at 66.8 and ranked in just the 9th percentile of all stocks on that metric, the data tilts cautious.
The insider picture adds a layer worth noting. On April 27 — after the Q4 announcement date was set but ahead of the actual print — the CEO, CFO, COO, CMO, General Counsel, and Chief Commercial Officer all sold shares simultaneously, collectively raising over $10 million. The trades were executed at $63.66, well above the current price of $54.13. The net 90-day insider flow is technically positive at $13.8 million, but that reflects award grants received in the same period rather than open-market buying. The executive-level cluster sell on April 27 is the more relevant signal.
Institutional ownership shows a few notable moves. Capital Research added 479,000 shares as of April 30. JP Morgan Asset Management initiated or significantly built a position of 1.53 million shares — a 1.48 million share addition in the period. Baillie Gifford remains the largest holder at 12.1% with minimal change. The institutional picture is therefore mixed: passive and systematic buyers are present, but the concentration of fresh buying in quant-leaning and index-hugging names doesn't read as a strong conviction bet.
Among peers, EL gained 8.2% on the week and IPAR added 6.1%, while ELF managed just 2.2%. The beauty complex is recovering, but e.l.f. is lagging its closest correlates. The stock's month-on-month decline of 18% already reflects a meaningful de-rating. What to watch now is whether the short rebuild accelerates further toward the April peak of 8.4 million shares — and whether availability tightening forces the cost to borrow to rise more sharply than its current gentle drift upward would suggest.
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