Model and entrepreneur Hailey Rhode Bieber made a $1 billion bet and achieved a significant win.

In late May, E.l.f. Beauty unexpectedly announced it had acquired Rhode Inc., the Beverly Hills lifestyle and beauty brand founded by Bieber. This move underscored how much E.l.f. has disrupted the beauty industry and highlighted the meteoric rise of Rhode since its launch in 2022.

E.l.f., an Oakland-based cosmetic and skincare company, will pay $800 million, consisting of $600 million in cash and $200 million in newly issued common stock. Additionally, it will provide a potential payout of $200 million based on Rhode’s growth over the next three years.

Since its founding, Rhode has seen incredible growth, more than doubling its consumer base over the past year and generating $212 million in net sales in the 12 months ending March 31. E.l.f., which stands for “eyes, lips and face,” aimed to disrupt the beauty industry when it emerged in 2004, establishing itself as an affordable makeup brand available exclusively online. Over time, the brand expanded into retailers like Target Corp. and broadened its product range, ultimately becoming the top U.S. cosmetic brand by unit sales, according to Nielsen Holdings.

“The fact that Rhode would be able to get over $200 million in sales in the three years speaks to the unique proposition that it brings to the market,” said Anna Glaessgen, senior research analyst at B. Riley Securities. “It really speaks as a vote of confidence in terms of Hailey’s leadership of the brand as they move into the next phase.”

Bieber viewed the deal as a testament to her company’s growth.

“Just three years into this journey, our partnership with E.l.f. Beauty marks an incredible opportunity to elevate and accelerate our ability to reach more of our community with even more innovative products and widen our distribution globally,” she said in a statement.

E.l.f. Chairman and Chief Executive Tarang Amin added in a statement that his company, deemed a mass-market brand in the beauty industry, “found a like-minded disruptor in Rhode.”

He said: “Rhode further diversifies our portfolio with a fast-growing brand that makes the best of prestige accessible. We are excited by Rhode’s ability to break beauty barriers, fully aligning with E.l.f. Beauty’s vision to create a different kind of company. Rhode is a beautiful brand that we believe is ready for rocketship growth.”

A big deal for 2025

Similar to E.l.f. in its early days, Bieber’s products are currently available only online, considered in the industry as an entry-level prestigious brand. By the end of the year, the company plans to initiate an in-store partnership with Sephora in North America and the U.K. – and this partnership will remain in place. 

Bieber will serve as Rhode’s chief creative officer and head of innovation, while also acting as a strategic adviser to the merged companies. Rhode Chief Executive Nick Vlahos will remain in his role as well.  

The Rhode acquisition is one of the largest sales of L.A. companies this year. For E.l.f., this marks its third acquisition since purchasing the clean-beauty brand W3ll People, now marketed as Well People, for $27 million in 2020, and the skincare brand Naturium for $355 million in 2023. In 2020, E.l.f. also collaborated with singer and songwriter Alicia Keys to launch Key Soulcare, a lifestyle brand that offers skin and body care products, candles and cosmetics.

However, the Rhode purchase is also one of the largest in the beauty industry overall, according to Forbes. Last year, Estée Lauder finalized its $1.7 billion acquisition of Deciem, which included its flagship skincare brand The Ordinary; and in 2023, Estée Lauder acquired Tom Ford’s beauty, fashion, and fragrance lines for $2.8 billion. L’Oreal purchased Aesop for $2.5 billion in 2023. 

Financial markets reacted positively to the news of the Rhode acquisition. Shares in E.l.f. surged nearly 24% to close at $111.84 on May 29, the day after the announcement. That same day, the company also announced that net global sales rose 28% to $1.3 billion during its fiscal year that ended in March.

“We believe E.l.f can quickly take Rhode to a number of international markets,” Olivia Tong, managing director at Raymond James Equity Research, wrote in a report. “Rhode checks a number of boxes as it accelerates (E.l.f.’s) growth and margins, broadens its reach with Gen Z (and) Alpha consumers, and raises its AUR (average unit retail).”

Glaessgen echoed that view and noted that in recent interviews both Amin and Bieber revealed that Rhode could’ve received more money from a private equity firm or some other company.

“In our understanding this was a competitive process,” said Glaessgen. “I think it speaks favorably of (E.l.f.) as the acquirer of choice … (and) how E.l.f. is increasingly viewed as a really strong brand incubator.”

The E.l.f. stock price closed at $128.54 on June 12.

Social media buzz 

Some analysts attributed Rhode’s remarkable popularity to Bieber’s celebrity status and influence, particularly on social media. While she is married to pop star Justin Bieber and is the daughter of actor Stephen Baldwin, she boasts 55 million followers on Instagram and 15 million on TikTok.

Bieber and her leadership team leveraged influencers to help promote Rhode, following the strategy of beauty and fashion brands like El Segundo-based Savage x Fenty, owned by singer and actress Robyn Rihanna Fenty. 

“Whether they’re celebrities or influencers, they’re their own brand … They’re the ones with the power because they have the audience,” said Robin Tolkan-Doyle, founder of Woodland Hills beauty company WOO World of Oils by Beautyologie. “You want to get in front of their audience.”

The social media buzz has worked in Rhode’s favor, attracting over 3 million followers on Instagram alone. The skincare and cosmetics company generated $248 million in earned media value in 2024 (EMV), reflecting a 367% increase year-over-year, according to data from CreatorIQ, an influencer marketing platform. EMV serves as a relative metric that monitors social media buzz for a brand based on CreatorIQ’s panel of content creators.   

“Rhode has proven itself,” said Tolkan Doyle, who is also public relations and marketing expert at CharmedPR in Woodland Hills. “To have such growth in a short period of time speaks volumes to the people who’re running (the company) and to her power as a celebrity and to her audience and how people want to emulate her.”