More billion-dollar beauty? Hailey Bieber, Selena Gomez eye exits

Hailey Bieber and Selena Gomez are reportedly considering exits from their respective beauty businesses, Rhode and Rare Beauty, potentially fetching valuations of $1 billion and $2 billion. Behind the scenes, heavyweight advisors like JP Morgan, Moelis, and unnamed consultants are steering these talks. If deals materialize, they could rank among the most high-profile celebrity beauty transactions to date. Yet, the buzz raises a crucial question: Is this a sign of strategic maturity, or is a bubble about to burst? “These brands were all founded around the same time and have now reached a phase where they either scale with institutional backing or risk plateauing,” says Mario Ortelli, managing partner at Ortelli &Co, a strategic M&A advisory boutique for luxury goods, and former global head of luxury goods at Bernstein. “That’s why they are all on the market now.” Indeed, the timing isn’t coincidental. The celebrity beauty boom, born during the pandemic and bolstered by social media virality, is now maturing. Many of these brands, including Rhode, launched in 2022, and Rare Beauty (2020), have outgrown their digitally native DTC beginnings. Their founders — flush with social capital — are now exploring capital gains. Celebrity beauty brands: Riding high or overvalued? Rare Beauty’s $2 billion valuation and Rhode’s $1 billion have sparked scrutiny. While product performance and consumer loyalty have helped justify rapid growth, analysts warn that frothy valuations may be partially propped up by hype. “Striking while the iron is hot is a logical step,” says Zarina Kanji, managing director for UK and Europe at WPIC Marketing + Technologies. “With the unpredictable global economy so far in 2025, tapping out now could be a wise decision especially given the uncertainty with tariffs — it is no coincidence the brands tapped for exit are mostly from the U.S.” Though, Kanji adds, “it’s hard to quantify the dollar value of ‘hype.’ Without the celebrity’s popularity, it’s unlikely these brands would have scaled this quickly.” Hwee Chung, China beauty insight director at Kantar Worldpanel agrees: “Celebrity power is a key element behind celebrity beauty valuation as it allows the brand to be promoted globally without having to overly depend on traditional media and marketing activities.” “They embody lifestyle, personality, and ‘vibe’ that consumers pursue, and fans buy in because of curiosity and parasocial connection,” she adds. “Such celebrity power is particularly important in the beginning stages of the brand lifecycle especially in this era of social media.” Rare Beauty’s timing — launching in September 2020 amid pandemic anxiety — was pivotal. Gomez’s openness about her mental health, paired with charitable donations aiming to raise $100 million, resonated with Gen Z. Rhode, meanwhile, cultivated wait-list-driven scarcity and launched with a minimalist ethos. A single viral drop — the “glazed doughnut” skin aesthetic — propelled the brand from indie darling to social media phenomenon. Rhode’s Lip Case, which integrates lip balm into an iPhone case, became a viral sensation and typifies how these brands blend novelty with marketing savvy. Still, Ortelli cautions potential buyers to look beyond the social halo. “The key is longevity,” he says. “These brands must move from celebrity-driven hype to true brand equity — through product performance, lifestyle communication, and a real customer base.” Fenty Beauty’s institutional LVMH muscle vs. Rhode and Rare Beauty’s indie grit The contrast between celebrity-backed indies and institution-backed brands like Fenty Beauty is instructive. Rihanna’s Fenty has enjoyed robust growth in China, supported by LVMH’s extensive retail infrastructure and local expertise. “Being part of a larger beauty group provides critical advantages — supply chain, compliance, offline distribution, and even legal support,” Ortelli says. “That’s why we often see celebrity brands acquired once they reach a certain size. They need that next platform.” Kanji concurs, but adds nuance. “Fenty leveraged both LVMH’s infrastructure and Rihanna’s longterm cultural investment in China. She laid the groundwork years before launching the brand,” she says, pointing to the star’s 2012 collaboration with Coldplay and her viral 2015 Met Gala appearance in Guo Pei. In May last year, Rihanna made waves in China with a strategic campaign to promote Fenty Beauty’s expansion. The pop icon hosted a livestream on Douyin alongside top beauty influencers @QierLeo and @Shenyexulaoshi, drawing 70,000 viewers as she demoed hero products like the Gloss Bomb Lipstick and Eaze Drop Skin Tint. She also surprised fans at the Fenty Beauty Alley pop-up in Shanghai, where she leaned into her local nickname “Queen of Shandong” by making jianbing — an iconic street snack — on a glitter-covered food cart. The appearance went viral, with hashtags tied to the event surpassing 81 million views on Weibo and millions more on Xiaohongshu (also known as RedNote) and Douyin. Could standalone players like Rhode replicate Fenty’s China success without institutional clout? It’s a tall order. Even as Florasis and other local brands prove that independence is viable, regulatory, logistical, and competitive hurdles in China remain formidable. “Standalone brands like Rhode can first seek to leverage its DTC expertise in cross-border e-commerce expansion to achieve a certain scale,” says Chung. “But they will need a local partner or distributor to handle logistics, compliance, and marketing, in order to achieve a more substantive and long-term growth, whether in the form of strategic joint venture, or acquisition.” DTC limitations and the value of shelf space Another friction point is the pure DTC model many of these brands rely on. Rhode, in particular, has minimal retail presence beyond occasional pop-ups. “DTC is margin-protective online, but from an acquisition perspective, a retail footprint offers validation,” Ortelli says. “It makes a brand more appealing and easier to scale globally.” Kanji believes Rhode’s DTC-first success is impressive, but it may limit its next stage. “Having an omnichannel strategy is critical to broaden reach,” she says. “Rhode has grown fast online, but Sephora gave Rare immediate access to a broader audience beyond Selena Gomez’s fans.” For Rhode, building out retail could be key to maximizing future gains — either pre- or post-acquisition. In China, Rhode has amassed 3,131 instances of user-generated content (UGC), with its hashtag attracting over 61 million views on Xiaohongshu — a noteworthy level of engagement for a brand without an official presence in the market. By comparison, Rare Beauty’s hashtag has garnered 26 million views and 9,221 instances of UGC, while Fenty Beauty exceeds 10,000 UGC posts. Beauty bloggers frequently review Rhode’s products, often dubbing them as “white-girl aesthetic essentials” (白女必备). Despite this growing buzz on Chinese social media, Rhode has yet to capitalize on the momentum due to its absence from the market. Local beauty shoppers can only rely on Taobao’s daigou agents to purchase the label’s products and some netizens lamented they often end up buying fake products. “All brands need to ultimately recruit more buyers to grow, and the ability to penetrate more countries, especially the ones with a large young population will determine these brands’ growth trajectory. When a brand is small, the DTC model works well to help drive a higher profit margin and build authentic connection with consumers. But as they grow, building an omni-channel presence and seamless consumer journey from exposure and interaction to purchase and engagement across different platforms is crucial,” says Chung. Retail touchpoints, especially in prestige channels like Sephora or niche multi-brand boutiques in Asia, act as both brand validators and consumer acquisition engines. For Gen Z consumers, who crave tactile discovery, online-only may no longer be enough. Who's acquiring celebrity beauty brands, and why? The buyer landscape is also diversifying. Legacy conglomerates like Estée Lauder and L’Oréal may eye Rare Beauty for its scale and resonance with younger consumers. Meanwhile, private equity firms could be drawn to Rhode’s clean runway for channel expansion and operational optimization. “When a brand gets big enough, strategic buyers step in — they want to keep it long-term,” Ortelli says. “Private equity tends to flip after five years, aiming to sell to a larger player.” Kanji adds that strategic acquirers may also view these brands as learning laboratories. “Acquiring Rare Beauty could help a conglomerate absorb best practices in social-led marketing and community-building — areas where heritage brands often lag,” she says. Yet, not all celebrity beauty plays will end in billion-dollar exits. The market is crowded. Dozens of influencer or celebrity-backed brands have launched in the past five years, from Ariana Grande’s R.E.M. Beauty to Halsey’s (Ashley Frangipane) About-Face. “Celebrity-backed beauty is a crowded sector,” Ortelli says. “Acquirers need to be cautious about over-relying on personality-driven demand. Some brands have managed to become more than their founder — but others are just extensions of fleeting fame.” Celebrity beauty: A bubble? Are we witnessing the start of a celebrity beauty bubble bursting? Certainly, the ecosystem is more mature. Consumer expectations have shifted from branding alone to proven efficacy and ingredient integrity. Celebrity aura can no longer carry weak formulas. “Customers today are fickle,” Kanji says. “If a product doesn’t perform, it’s game over — celebrity or not.” Still, the fundamentals behind Rare Beauty and Rhode remain relatively strong. Both brands have cultivated loyal communities, developed hero products that perform, and innovated with format and messaging. What’s unclear is whether others will follow suit — or fade into the background. In 2024 alone, several indie and influencer brands explored exits, including Kosas Cosmetics. Not all found buyers. Not all will. If Rhode and Rare Beauty sell at their current valuations, it may mark the peak of this cycle. But if they struggle to close deals, it could indicate that the market is recalibrating — prioritizing fundamentals over fandom.

More billion-dollar beauty? Hailey Bieber, Selena Gomez eye exits

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Published April 16, 2025

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More billion-dollar beauty? Hailey Bieber, Selena Gomez eye exits