Price Forecast:

Bullish Case: The upcoming earnings report on November 22 could drive ELF's price higher as analysts anticipate solid sales growth, potentially triggering a sustained rally, supported by robust social media engagement and positive sales trends.

Bearish Case: Should the earnings report reveal weaker-than-expected results or guidance, ELF may face a significant downturn as market sentiment quickly shifts, exacerbating any current volatility, particularly given high implied volatility rates.

Potential Outcomes:

1) Positive earnings surprise (60%) could drive shares above $130;

2) Earnings meet expectations (20%);

3) Earnings miss leading to a decline to $110 (15%);

4) Major negative macro events causing further downside (5%).

Trading Oracle: Initiate a bullish debit spread by buying $125 calls and selling $130 calls, trading within the next two weeks to capitalize on anticipated upward movement post-earnings. Hedge with a protective put at $120 to minimize potential losses, given heightened volatility. This approach leverages predicted volatility advantageously.

November 15, 2024