Beauty company e.l.f. Beauty (ELF.US) said on Thursday that accusations by the listing agency Muddy Waters that the company exaggerated its revenue and inventory data were “baseless.”

A report last night suggested that e.l.f. Beauty took a short sale, claiming that the company may have overstated its revenue by as much as $0.19 billion in the past three years and exaggerated the number of inventories to make up for undersales.

After the short sale report, e.l.f. Beauty's share price fell 16% on Wednesday, but the closing market fell to about 2%.