(Bloomberg) -- Morphe makeup, which rode the power of social media stars to rapid growth and a $2 billion valuation, said it’s planning to close all its US stores.

On Thursday, the company listed about twenty locations on its website. Forma Brands, Morphe’s parent, said in a statement that it’s shutting down its physical stores to focus on e-commerce and wholesale.

Partnerships with powerhouse internet celebs such as Jeffree Star and James Charles helped revenue top $400 million in 2019, according to a company presentation from December 2021 reviewed by Bloomberg. But Morphe severed ties with them after Star was accused of using racist language in 2020 and allegations of sexual misconduct plagued Charles in 2021.

Results at Forma, which generates about 80% of its sales from Morphe, have since suffered. Revenue missed internal planning by about 20% in 2021, according to the document. In the first 10 months of that year, revenue tied to Charles, Star and Jaclyn Hill — another social media star — fell by 66% to $32 million.

The company’s descent from beauty-world darling known for its accessibly priced eye shadow palettes and frenzied store openings once again shows the danger of betting on social media buzz.

“It’s a risky model,” said Kelly Dobos, a cosmetic chemist who works as an industry consultant. Influencers “always become less relevant.”

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In October, Women’s Wear Daily reported the company was considering bankruptcy. As part of a buyout by private equity firm General Atlantic in 2019, the company took on $650 million in debt.

During a court proceeding last month in Hawaii, a lawyer defending Forma in a lawsuit brought by a landlord alleging the company owes rent said a bankruptcy filing was still being considered. This is just one of several legal spats Forma has had with mall owners over the past few years.

Forma declined to directly comment on a potential filing, but said it’s considering several options.

Ending relationships with Charles and Star left the company with an abundance of inventory it had trouble selling, according to a former employee who asked not to be identified. The company also spent heavily to launch a makeup line with pop star Ariana Grande, but sales disappointed, according to a second former employee.

Morphe, founded in 2008 and based in Los Angeles, won fans with cheaper options often tied to influencers with huge fanbases — Star and Charles each have more than 15 million followers on YouTube. A palette of 35 Morphe eyeshadows would sell for about $30, while some competitors charged more than $100 for 10, said Richard Reyna, a YouTuber who runs a celebrity gossip channel, RichLux.

The influencer-branded makeup regularly sold out. That caught the attention of General Atlantic, which bought a majority stake in the company in a deal that valued it at more than $2 billion.

But there were early signs of trouble. Despite the bullishness of leveraged finance markets in 2019, investors balked at the $650 million loan intended to finance the deal, leaving Jefferies Financial Group Inc. stuck with most of the debt on its books.

Jefferies eventually sold a chunk of the loan to investors. But Morphe soon struggled as the pandemic reduced demand for makeup with people masking up and staying home. Then it cut ties with Star.

Seeking to diversify away from influencers, Morphe rebranded itself as Forma, an incubator focused on acquiring and building out smaller lines. But the company’s strategy floundered. In the document reviewed by Bloomberg, Forma said that in 2022 it planned to pause development and investment in new products for several of its brands.

Shelby Wild, founder of Playa Haircare, has sued for $15 million in damages for mismanagement of the brand after Forma acquired it. In a statement, Forma said the suit was without merit.

The company’s current state is far from where it was late last decade. In December 2018, Hill, the influencer, opened Morphe’s first store in Florida. Hundreds of young women flooded Tampa’s International Mall, with security guards trying to maintain order. Local press previewed and then covered the event.

But four years later, that Morphe store is gone after the company, according to court records, was evicted for owing more than $300,000 in unpaid rent.

(Update adds company statements in second, ninth and 16th paragraphs. An earlier version of this story was updated with details throughout on company’s results and strategy.)

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