Finance expert reveals why Hailey Bieber hasn't actually made a billion dollars after Rhode deal

Daily Mail​

2 days ago

Hailey Bieber may have just sold her skincare brand Rhode in a jaw-dropping $1 billion deal - but that doesn't actually make her a billionaire.
According to finance expert Caroline Beggs, who has built up a loyal following on TikTok, the model and entrepreneur, 28, is far from hitting the ten-figure status.
The real number she is taking home is likely closer to $242 million.
Beggs, who boasts an MBA from Stanford and experience in high-level finance, broke down the numbers behind the massive sale of Rhode to e.l.f. Beauty.
'I can't last another second having you think that Haley Bieber is a billionaire, so let me explain to you why,' she began the video.
She explained that while the sale was valued at $1 billion, $200 million of that is tied up in what's called an 'earn out.'
This means Rhode has to hit certain goals over the next three years for anyone to see that money.
The brand was backed by outside investors, including ONE Luxury Group and a few small angel investors.
'These types of investors get preferential treatment in these payouts and are often guaranteed returns before money gets to lower priority investors. This is what's called a liquidation preference,' she explained.
Even if they only owned 20 percent of the company, they could take home 25 percent of the proceeds.
The company also has about 50 employees, including co-founders Lauren and Michael Ratner, and Beggs estimates they may collectively own 10 percent of Rhode.
If you take away investor and employee equity, Hailey might walk away with around $520 million. But it doesn't stop there.
A quarter of that payout could be in e.l.f. stock, which is likely under a lockup period, meaning she can't cash it for six months to two years.
Beggs also explained that the stock price could drop by the time she can sell.
Then come the taxes as a resident of California, including federal and state rates, which means nearly 38 percent of her payout could go to taxes.
After all of that, Hailey is left with about $242 million, which is an enormous sum, but still far from billionaire status.
'She is definitely not a billionaire yet. Let's see how e.l.f's stock price does after the acquisition,' the creator said.
'That's probably Hailey's best bet of being a billionaire right now unless Justin wants to go on tour.'
On May 28, Hailey announced she sold Rhode to e.l.f cosmetics in a $1 billion deal.
Bieber launched her much-anticipated brand in June 2022, releasing only three products at the time - Peptide Glazing Fluid, Barrier Restore Cream, and Peptide Lip Treatment.
'When I launched @rhode in 2022, I always had big dreams for the company, and the most important thing to me is to keep bringing rhode to more spaces, places, and faces globally,' she wrote in the caption of an Instagram post celebrating the news.
'So today I am so incredibly excited and proud to announce that we are partnering with e.l.f. Beauty as we step into this next chapter in the world of rhode.
'I found a like-minded disruptor with a vision to be a different kind of company that believes in big ideas and innovation in the same way that I do and will help us continue to grow the brand,' her message continued.
'I feel invigorated, excited, and more ready than ever to step into an even bigger role as Chief Creative Officer, and Head of Innovation of rhode as well as strategic advisor to e.l.f. Beauty.'
Hailey will still serve as founder of the brand, and Chief Creative Officer and Head of Innovation, according to Business Wire.