The deal would mark a shift in strategy and expand into the prestige beauty market as e.l.f. faces weak demand from mass market customers.

Model Hailey Bieber's makeup and skincare brand, Rhode, is being snapped up by Elf Beauty for about $1 billion, giving the budget cosmetic retailer access to a celebrity-endorsed product line that has become hugely popular among Gen Z and millennials.

Beauty (NYSE: ELF) signed a definitive agreement to acquire rhode, a fast-growing, multi-category lifestyle beauty brand founded by Hailey Bieber