Kylie Jenner, Selena Gomez, and Hailey Bieber’s brands dominate beauty’s creator economy. Fame is only part of the reason

Celebrity-founded brands accounted for five of the top 10 beauty companies by 2025 creator-marketing performance, while beauty’s top brands averaged a VIT score of 687,000. Creator volume rose 66% year over year to 22,100, and TikTok Shop health-and-beauty sales exceeded $4.4 billion, making it the fourth-largest U.S. e-commerce retailer in the category. The sector’s commercial potential is underscored by E.l.f. Beauty’s agreement to acquire Rhode for up to $1 billion and Rare Beauty’s estimated $2.7 billion valuation, although failed ventures including GXVE Beauty and Flower Beauty show fame alone does not ensure durable demand.

Analysis

ELF’s strategic value in Rhode is less about adding another brand than acquiring a founder-led, low-friction customer-acquisition channel that can be scaled through ELF’s retail distribution, supply chain, and international infrastructure. If repeat purchase and retail conversion hold, the deal can support revenue synergies that are more durable than paid-media efficiency alone; if sales remain founder-post dependent, the acquisition risks becoming a high-multiple marketing asset with an earn-out liability rather than an accretive growth engine.

The key second-order pressure falls on legacy beauty companies reliant on prestige wholesale, department-store traffic, and broad paid-media campaigns. TikTok-led discovery shifts bargaining power toward brands with rapid product-development cycles, creator seeding capabilities, and direct social-commerce conversion, favoring ELF over slower incumbents such as EL and COTY. However, creator-performance metrics are not sales or retention data: falling average creator reach and marginally weaker content engagement suggest increasing saturation and a potentially rising cost to sustain relevance.

Near term, this is a modest sentiment support rather than a standalone earnings catalyst. Over the next 1-3 quarters, investors should focus on Rhode’s disclosed net sales, gross-margin profile, retail-door productivity, and whether ELF’s marketing expense remains controlled while integrating the brand. Over 6-18 months, successful conversion of creator-driven demand into repeat purchases could justify multiple resilience; a TikTok commerce slowdown, creator-disclosure regulation, or weak post-launch cohorts would expose the fragility of the growth narrative.

Key Decisions for Investors

• Maintain or initiate a modest long ELF position on integration-driven volatility, with a 6-12 month horizon. Underwrite only if subsequent reporting demonstrates Rhode growth without a material increase in ELF’s marketing expense as a percent of sales; target a 2:1 upside/downside profile versus a stop triggered by a meaningful cut to consolidated organic-growth guidance.
• Use a 3-6 month pair trade: long ELF / short EL. The pair isolates digitally native, accessible-price beauty and creator-commerce exposure against a more wholesale- and prestige-dependent model; reassess if EL shows accelerating organic sales and margin recovery that narrows the execution gap.
• Do not extrapolate creator rankings into a broad beauty-sector long. Set an alert around ELF’s next earnings release for Rhode revenue, repeat-rate or retail productivity disclosures, and earn-out assumptions; absent these data, treat the acquisition’s value creation as unverified rather than a reason to chase the stock.
• Monitor TikTok Shop health-and-beauty category growth and any U.S. platform-policy disruption over the next 90 days. A material decline in platform conversion would be a near-term de-risking signal for ELF and would likely favor established retail-distribution names over social-commerce-dependent challengers.