Selena Gomez reportedly exploring Rare Beauty sale amid US$2B valuation as celebrity brands shine

(Image credit: Getty Images).

20 Mar 2024 --- Singer and actress Selena Gomez may offload her cosmetics empire, Rare Beauty. With a valuation of US$2 billion, the company reportedly hired financial advisers to weigh offers for a potential sale.

According to Bloomberg, the star plans to remain involved in the business, no matter the outcome. Rare Beauty apparently brought Goldman Sachs and Raymond James on board to field interest from firms looking to invest in or acquire the company. The bankers are said to have met with potential buyers but not with Gomez.

Popular products flourish
The beauty brand was founded in 2020, focusing on liquid cosmetics that can be applied with minimal tools. All the products are vegan and cruelty-free, with “easy to open and close” packaging for accessibility.

Following its release, the company’s blush became viral on TikTok. After the social media popularity, fans awaited launches from the brand and reviewed the latest products online, generating more buzz around the brand.

The Business of Fashion cited Rare Beauty as one of the “most sought-after M&A targets for 2024.” Additionally, last July, Bloomberg reported that the cosmetics company generated approximately US$70 million in revenue in 2022.

Fame does not equal success
Celebrities such as Gomez, Rihanna (Fenty Beauty) and Hailey Bieber (Rhode) successfully leveraged their status to create thriving beauty brands but other stars have not attained the same degree of success.

The same goes for social media influencers. TikTok’s most-followed dermatologist, Dr. Muneeb Shah, unveiled his skin care brand, Remedy, yesterday.

Rare Beauty liquid blush went viral on TikTok.Another influencer, Jaclyn Hill, recently closed her cosmetics brand after less than five years in business. The closure followed parent company Forma Brands’ turbulent moves last year. The company was said to have struggled post-pandemic with sliding color cosmetics sales, supply chain issues and controversy around celebrity brands such as Jeffree Star and James Charles.

One year ago, Forma entered Chapter 11 bankruptcy after dismal sales and mounting debt. It also sold its license to R.E.M. Beauty by Ariana Grande. The pop star purchased the assets tied to the brand for US$15 million.

R.E.M. Beauty and Lady Gaga’s Haus Labs have not been as successful as Rare Beauty — and the other aforementioned celebrity beauty brands — both having undergone revamps.

According to The Beauty of Marketing, Rare Beauty’s success story lies in its authenticity, celebrating individuality and self-love, while Gomez drives the branding.

Mental health conversations
The company has exuded advocacy for mental health, with the founder being open about her struggles and the brand pledging to donate 1% of its sales toward an in-house fund that raises awareness for mental health since its conception.

The brand capitalizes on the positive consumer perception of mental health awareness and mindfulness trends. Gomez also co-founded Wondermind, a start-up focused on improving mental health valued at US$100 million in 2022.

The actress and singer has 430 million followers on Instagram, which ranks her among the ten most-followed accounts on the social media platform. She has used that audience to promote her projects, speak out about mental health and benefit other business ventures.

On the social news website Reddit, a conversation emerged about the sale and valuation of Rare Beauty.

One user describes everything they have tried from the brand as “a hit.” Another commenter expresses concern for the quality of the products if a sale were to take place, writing: “Hopefully, if she sells, the quality stays the same.”

By Sabine Waldeck

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