A major beauty company wants to sell value this season. Investors sell stocks.

One major beauty brand believes that sedentary consumers won’t give up on their self-care routines this holiday season — and may even increase them.

This is a trend that Elf Beauty (ELF), which prices 75% of its products at less than $10, has seen in previous cycles of macroeconomic uncertainty, said CFO Mandy Fields. Investopedia Wednesday. However, in the meantime, investors are concerned about the company’s outlook, causing the stock to fall sharply in after-hours trading after its latest quarterly results arrived.

“There are a lot of things going on in the economy right now,” Fields said. “You have a government shutdown, SNAP benefits that won’t reach the people who need them, layoffs and tariffs.” In August, the company raised the prices of some products by $1, citing rising business costs due to tariffs and inflation.

Shoppers have become “optional,” Fields said. “They have a limited amount of money.” When budgets are tight, consumers often look for affordable luxuries, such as cosmetics — or what is sometimes called the “lipstick effect,” Fields said.

“We represent that value,” she said. “You can buy two of our lipsticks or lip balm and still have money left in your pocket.”

As the holiday shopping season approaches, Fields said the company’s portfolio of brands — including its flagship low-priced cosmetics and skincare line and higher-priced brands like Keys Soulcare and Hailey Bieber’s Rhode brand — allows it to cover a range of price points.

California-based Elf Beauty on Wednesday announced its financial results for the second quarter (ending September 30). Sales rose 14% year over year to $344 million from $301 million a year earlier, up 12% for the first six months of the fiscal year but significantly missing the Visible Alpha analyst consensus. Adjusted net income was $40 million, or 68 cents per share, compared with $45 million, or 77 cents per share, a year ago, but beat estimates.

Elf expects full-year fiscal 2026 revenue to be between $1.55 to $1.57 billion, which suggests an 18% to 20% increase year over year but comes in lower than Wall Street expected. That weighed on the stock, which was already in the red for 2025, in after-hours trading, sending it down more than 20% in the latest move.

“We remain confident in our strategy to increase our market share,” CEO Tarang Amin said in a statement.

“The latest figures show serious weakness in the bottom line,” said Neil Saunders, managing director of GlobalData Retail. “However, maintaining its value position even at the expense of short-term profit is the right move.”