Can Hailey Bieber's Beauty Brand Break the M&A Slump? Here's What You Need to Know

With Rhode's billion-dollar valuation, Hailey Bieber beauty brand is exploring acquisition options in a tough market. But will Hailey Bieber’s star power be enough to seal the deal?

Hailey Bieber for Rhode's summer lip treatment campaign. Courtesy of Rhode/Harley Weir

Hey Talkers! So, some big news is brewing in the beauty world right now. You know how everyone’s obsessed with Hailey Bieber’s beauty brand, Rhode? Well, it turns out that Rhode is currently exploring options for a potential acquisition. The brand has reportedly hired J.P. Morgan and Moelis to help them figure out the best deal. And guess what? They’re hoping to be valued at $1 billion! Pretty wild, right? Especially considering that Rhode is still fairly new on the scene.

But here’s the thing – there’s been a huge slowdown in beauty industry mergers and acquisitions (M&A) lately. Big brands like Rare Beauty and Makeup by Mario have been rumored to be up for grabs in the past year, but none of those deals have gone through. And now, with Rhode looking to be valued at a billion bucks, people are wondering: Can Hailey Bieber actually pull this off?

Is Rhode Ready for the Big Time?

First of all, let’s talk about why this is such a big deal. Hailey Bieber's brand, Rhode, has grown rapidly since launching, and it's now estimated to be bringing in around $200 million in sales annually. However, while that's impressive, a lot of industry insiders are skeptical about a deal going down in this market. One source even pointed out that, despite the fame behind Rhode, buyers are nervous about investing in a brand that's still pretty much all online.

You know how it is, especially in today’s unpredictable economy. Potential buyers are hesitant to shell out big bucks for a brand that relies so heavily on one celebrity and one retailer. If you think about it, it’s a bit of a gamble. Sure, Hailey’s star power is massive, but building a brand that’s not solely dependent on her could take a little more time.

Will Rhode Expand Beyond Social Media Buzz?

Here’s another thing: social media has been a huge driver for Rhode’s success. Hailey has this incredible online presence, and that’s helped her build a pretty loyal following. But here’s the catch – some buyers are now seeing the massive reliance on social media as more of a negative than a positive. Why? Because while viral moments are great for driving traffic, those spikes in attention don’t always translate into consistent sales.

Plus, Rhode’s been throwing a lot of money into marketing, even beyond Hailey’s star power. She’s tapped models like Claudia Schiffer and Paloma Elsesser to be part of her campaigns, but at the end of the day, how sustainable is this strategy? Sure, Hailey’s a pro at marketing, but acquirers and potential retail partners want something more solid – not just the next viral trend.

Hailey Bieber's Rhode. Photo courtesy of Rhode/Stevie Dance

What About Rhode’s Profits?

Now, let's talk numbers. There’s a pretty good chance that Rhode is actually profitable, despite the cautiousness surrounding the brand. One insider estimated that the cost of goods for Rhode is around 15%, which means that the brand has a pretty nice profit margin, especially since they sell directly to customers. According to one source, this would give Hailey a $170 million budget to play with for marketing, team expansion, and logistics. That’s a pretty solid base to grow the brand even more.

What’s Next for Rhode?

Even though the market is tricky right now, there’s still some hope for smaller beauty deals. Skims, Kim Kardashian’s shapewear brand, just made a big move by acquiring Skkn by Kim from Coty, which could inspire other smaller deals in the beauty space. Unilever also acquired a sustainable deodorant brand, Wild, and while we don’t know the exact price, it was reportedly around 230 million pounds. So, it’s not all doom and gloom – there’s still a chance for Rhode to make waves, especially if it secures an exclusive retail partnership, possibly with a major player like Sephora.

Will Rhode’s Future Be Just as Bright?

While it’s still uncertain whether Rhode will find a buyer soon, the brand has definitely made its mark in the beauty world. There’s a lot of buzz around it, and while Hailey Bieber’s social media presence can’t carry it forever, there’s still a lot of potential for growth. So, can Rhode break through the M&A slump? Only time will tell, but it’s definitely a brand worth keeping an eye on.

What do you think? Will Hailey Bieber’s beauty brand secure a deal, or is the market just not ready for it yet? Let me know your thoughts in the comments below!