E.l.f. Beauty Inc.’s stock ELF tumbled 6% on Friday, after short seller Spruce Point Capital Management said the company has ties to the now-defunct NXIVM cult and may use some of its teaching in its marketing. The cult’s leader Keith Raniere was sentenced to 120 years in prison in October of 2020 for racketeering, sex trafficking of women, forced labor conspiracy and wire fraud conspiracy, while other leaders also received jail time. E.l.f. did not immediately respond to request for comment. “Spruce Point has grave concerns about e.l.f. Beauty. We believe there are several material risk factors that have been lurking under the radar undetected by the company’s investors, customers, employees and retail partners until now,” Spruce Point founder and chie investment officer Ben Axler told MarketWatch in emailed comments. MarketWatch cannot at this time confirm the allegations in the report. The stock has gained 71% in the year to date, while the S&P 500 SPX has gained 14%.

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