ODD

Executive Summary

AI-beauty compounder hit by an ad-platform shock — broken stock, intact balance sheet, no guidance

ODDITY Tech (ODD) spent two years as the rare profitable, fast-growing DTC beauty platform — FY2025 net revenue rose 25% to $810M at a ~72.5% gross margin with ~$2.10+ adjusted EPS — but the stock has collapsed ~83% from a $79 high to roughly $13 (market cap ~$745M). The break came in Q1'26: a technical algorithm change at ODDITY's largest advertising partner pushed spend into low-quality auctions, spiking customer-acquisition cost (CPA) at flagship IL MAKIAGE. Revenue fell 26% to $197.9M, the company swung to a −$21.4M net loss (adj. EPS −$0.17 vs ~−$0.04 est.), adjusted EBITDA went to −$7M, and management suspended FY2026 guidance — guiding only Q2 revenue down 25–30% with adj. EBITDA back to $8–10M positive. The balance sheet is the bull's anchor: $667M cash + investments, no debt, and an active $200M buyback ($82M repurchased in Q1, cutting Class A shares ~10.6%). Sell-side turned sharply negative — Goldman cut to Sell ($8), Barclays Underweight ($8), BofA Underperform ($8.50), Morgan Stanley Equal Weight ($10) — with the average PT down ~71% in 90 days. The debate is binary: a fixable platform glitch on a structurally advantaged tech platform, or evidence that the AI/data "moat" was really paid-acquisition arbitrage. We rate HOLD — the valuation has reset toward beauty-peer levels, but with no guidance and an unproven fix, conviction stays Medium until the Q2 print confirms normalization.

FUNDAMENTAL METRICS

Software-like margins, suddenly broken growth engine — FY2025 was a record (+25% to $810M, ~72.5% gross margin), but a Q1'26 ad-algorithm shock at IL MAKIAGE spiked customer-acquisition cost, cut revenue 26% and forced management to suspend FY2026 guidance.

FY2025 Revenue

$810.0M

+25% YoY, beat guidance

Q1'26 Revenue

$197.9M

−26% YoY (ad-CPA shock)

Q1'26 Gross Margin

69.7%

−520 bps YoY

Q1'26 Net Loss (GAAP)

−$21.4M

vs +$37.8M Q1'25

Cash & Investments

$667M

No debt; $278.6M cash equiv.

Adj. EPS Q1'26

−$0.17

Missed ~−$0.04 est.

Buyback Authorized

$200M

$82M done Q1; $167M left

FY2026 Guidance

Suspended

Q2 rev −25/−30%; EBITDA +$8–10M

Quarterly Revenue — Trailing 4 Quarters

$194M

Q2 2025

$203M

Q3 2025

$159M

Q4 2025

$197.9M

Q1 2026

GROWTH & CATALYSTS

The growth engine stalled — recovery hinges on fixing CPA and proving the platform, not the ad budget

−26%

Q1'26 Revenue Growth

First-ever YoY decline

40M+

Proprietary Customer Dataset

Powers AI product-matching

$667M

Cash & Investments

Funds buyback + brand launches

Feb 2025

Record FY2024 / 2025 Setup

FY2024 revenue $647M (+27%); IL MAKIAGE crossed $500M. ODDITY entered 2025 as a profitable DTC beauty-tech compounder with software-like margins.

Q3 2025

Guidance Raised

Raised FY2025 outlook to ~$806–809M revenue, ~72.5% gross margin, $161–163M adj. EBITDA, $2.10–2.12 adj. EPS — a streak of beat-and-raise quarters.

Mar 2026

$200M Buyback Authorized

Board approved a new $200M Class A repurchase (replacing $150M plan), expiring Mar 2029 — signaling confidence ahead of the Q1 shock.

Jun 2, 2026

Q1'26 Shock & Guidance Suspension

Revenue −26% to $197.9M on an ad-partner algorithm change that spiked CPA at IL MAKIAGE; swung to −$21.4M loss; FY2026 guidance suspended. Stock cratered.

Aug 3, 2026E

Q2'26 Print — Key Catalyst

Q2 guided to revenue −25/−30% but adj. EBITDA back to +$8–10M. The market needs evidence the CPA fix is taking hold and growth can re-accelerate into H2.

Earnings & Signals

Forward Estimates, Surprises & Insider Activity

Forward Earnings Estimates

FY+1 EPS Consensus~$0.07-$0.30 (FY2026E, heavily cut; Goldman trimmed to ~$0.07)

FY+2 EPS Consensus~$0.60-$1.00 (FY2027E, recovery-dependent, est.)

PEG RatioN/A — depressed/uncertain FY2026 EPS and negative current growth make PEG non-meaningful

Forward P/E~13-15x on a recovery FY2027 EPS; FY2026 P/E inflated/n/m on collapsed earnings

EPS Revisions (90d)↑0 ↓11 (Sharply negative — every covering analyst cut 2026/2027 EPS post-Q1; Goldman cut FY2026 to ~$0.07 and average PT fell ~71% in 90 days)

Guidance AccuracyStrong multi-year beat-and-raise track record through 2025, then a sharp break — FY2026 guidance suspended entirely after the Q1 ad-platform shock

Earnings Surprise Track Record

Q1 2026 Est: ~−$0.04 (adj.) Act: −$0.17 (adj.) Missed by ~$0.13 / ~325%

Q4 2025 Est: ~$0.18 Act: $0.20 Beat

Q3 2025 Est: in-line/beat Act: raised FY outlook Beat + raise

Q2 2025 Est: in-line/beat Act: beat Beat

Beat RateBeat 3 of the last 4 quarters; the Q1'26 miss was severe (~325% below) and broke a long beat-and-raise streak

Insider Activity (90 Days)

Net Buying/Selling$0 reported open-market insider purchases; company-level buyback ~$82M in Q1'26

Sell/Buy RatioN/A at the individual-insider level — Class B founders are not transacting in the open market; the dominant signal is the corporate buyback

Mixed-to-constructive. There is no notable open-market individual insider buying to flag conviction, but the company itself is an aggressive repurchaser ($82M in Q1, $167M remaining), which functions as a corporate vote of confidence at ~$13. Founder Class B control means insider economic alignment is high even without recent open-market trades.

The most material capital signal is corporate, not personal: a $200M buyback authorization (Mar 2026) with ~10.6% of Class A shares retired in Q1'26 alone. No disclosed insider sells; founder/CEO Oran Holtzman retains super-voting control.

Peer Comparison

Relative Valuation vs. Competitors

Company	P/E	EV/Rev	Rev Growth	Gross Margin
ODDITY Tech	~12x	~0.7x	−26% (Q1'26)	~70%
e.l.f. Beauty	~40x	~5x	~+10-15%	~70%
Coty	~15x	~1.8x	~low-single	~65%
Estee Lauder	~30x	~2.5x	~flat/neg	~72%

ODDITY's collapse has re-rated it from a tech-style multiple (it once carried ~6.7x EV/Revenue and ~43x EV/EBITDA) all the way down to roughly beauty-staple — or lower — territory: ~0.7x EV/Revenue and ~12x trailing earnings, far below ELF (~5x EV/Rev, ~40x P/E) and even discount/turnaround names like Coty. The market is now pricing ODD closer to a structurally challenged DTC retailer than the high-margin software-like compounder it traded as in 2024-2025. Its ~70% gross margin still rivals premium peers, but the negative top-line growth and suspended guidance justify the discount until CPA normalizes. The bull case is mean-reversion: if the platform thesis holds, the gap to ELF is enormous.

Valuation

Price Targets & Scenarios

Scenario	Price Target	Assumptions	Probability
Glitch Fixed, Platform Re-rates	$26	CPA normalizes by H2'26, IL MAKIAGE re-accelerates, Brand 3/medical launches land, and the AI/data platform thesis (vs. pure ad arbitrage) is vindicated. Revenue returns to double-digit growth in 2027, EBITDA margin rebuilds toward high-teens, and the stock re-rates toward a tech-DTC multiple off a washed-out base.	30%
Slow Normalization, Beauty Multiple	$14	CPA pressure eases gradually; FY2026 revenue still down meaningfully YoY but adj. EBITDA stays positive. Growth resumes in 2027 at a slower, more discount-retailer pace. Buyback supports the float. Stock trades as a consumer-staples beauty name near current levels, not a software multiple.	45%
Moat Was Ad Arbitrage	$8	The 'AI moat' proves to have been paid-acquisition dependent; CPA pressure persists or competition (ELF, TikTok-native brands) compounds it. Growth stays negative through 2026, EBITDA disappoints, and the stock converges to the cluster of Sell/Underweight $8 targets — a low-growth beauty company with eroding unit economics.	25%

Probability-Weighted Target: $16 (~22% upside vs $13.07)

$16

Weighted

Bull $2630%

Base $1445%

Bear $825%

Analyst Consensus

Goldman Sachs

Downgraded to Sell

Barclays

Underweight

BofA

$8.50

Underperform

Morgan Stanley

$10

Equal Weight

Consensus reset to roughly Hold after Q1'26. The average 12-month PT collapsed ~71% in 90 days into the low-teens (range ~$8 low end to ~$18 high), with Goldman (Sell, $8), Barclays (Underweight, $8) and BofA (Underperform, $8.50) clustered near the bottom and a handful of bulls still arguing the platform thesis. Sentiment is firmly wait-and-see pending Q2.

Technical

Key Levels & Options Intelligence

S/RSupport & Resistance

52-Week High (Jun 2025)

$77.83

200-Day Moving Avg

$38.81

100-Day Moving Avg

$24.04

50-Day Moving Avg

$14.26

Near-Term Resistance

$13.98

Current Price (Jun 20, 2026)

$13.07

Support / Recent Floor

$10.25

52-Week / All-Time Low (Jun 3)

$9.25

OptOptions & Sentiment

RSI (14-day): ~37.5 — approaching oversold; reflects the post-Q1 downtrend, bias bearish/neutral
Moving-Average Signal: Strong Sell — price below all major MAs (50d $14.26, 100d $24.04, 200d $38.81); ~64% below the 200-day
Beta: ~1.9 to ~3.3 (source-dependent) — elevated; trades as a high-volatility, headline-sensitive DTC name
Short Interest: ~4.43M shares · ~7.94% of float — meaningful skepticism, some squeeze potential on a positive Q2
Support / Resistance: Support $10.25 (with intermediate $11.52 / $12.46); resistance $13.98 then the $14.26 50-day MA
Implied Volatility: Elevated post-shock; options data thin — expect outsized moves around the Aug 3 Q2 print
Drawdown from Peak: −83% from the $77.83 52-week high to ~$13 on the CPA shock and guidance suspension
Realized Volatility: Double-digit intraday swings common since Q1; the stock has not yet found a stable post-shock range

Risk & Ownership

Risk Assessment & Insider Signals

!Risk Factors

Advertising-Platform Dependence (CPA Shock): A single technical algorithm change at ODDITY's largest ad partner spiked customer-acquisition cost, cut Q1'26 revenue 26% and erased profitability. The episode exposes deep dependence on third-party ad platforms for new-customer flow. If CPA stays elevated or the partner relationship deteriorates, the core growth engine remains impaired — and it calls into question whether the 'AI moat' is durable or just efficient ad arbitrage.
No FY2026 Guidance / Low Visibility: Management suspended full-year 2026 guidance, citing limited P&L visibility beyond a positive adj. EBITDA. Investors are flying blind on revenue, margin and EPS trajectory until at least the Q2 print, which structurally caps the multiple and amplifies volatility around each report.
Moat Skepticism vs. Beauty Competition: Bears argue ODDITY's data/AI advantage was overstated and its real edge was paid acquisition. Meanwhile ELF, TikTok-native brands and incumbents (Coty, Estee Lauder) intensify competition for the same online beauty consumer. If the platform can't reaccelerate organically, ODD converges to a low-growth beauty multiple.
Profitability & Cash Burn in 2026: The company swung to a −$21.4M net loss and −$7M adj. EBITDA in Q1'26, with −$21M free cash flow. While $667M cash and a no-debt balance sheet provide ample runway, a prolonged CPA problem could keep EBITDA depressed and pressure the buyback pace and the stock's value-support thesis.
Dual-Class / Governance Concentration: Co-founder/CEO Oran Holtzman controls super-voting Class B shares (10 votes each), giving founders entrenched control with effectively 0% Class A 'insider' float. Public Class A holders have minimal governance leverage, and capital-allocation or strategic decisions rest with insiders regardless of public-shareholder sentiment.
Execution Risk on New Brand / Telehealth Launches: ODDITY's longer-term growth case depends on launching new brands (Brand 3, medical/telehealth) on top of IL MAKIAGE and SpoiledChild. Doing so while the core brand's acquisition economics are broken raises execution risk; launch slippage or weak adoption would remove the offsetting growth narrative.

OOwnership & Insider Signals

Institutional Ownership: ~81% of shares are held by ~356 institutions. Baillie Gifford is the largest holder at ~6.05M shares (~10.5% of Class A), reflecting a growth-investor base that bought the long-duration platform story.
Quarterly Institutional Flow: Net selling last quarter — institutions bought ~38.8M shares but sold ~46.8M, a net reduction consistent with the post-Q1 de-rating and PT cuts across the sell-side.
Founder / CEO Control (Class B): Co-founder & CEO Oran Holtzman holds super-voting Class B shares (10 votes each), concentrating voting control with the founding team. Reported Class A 'insider' ownership shows ~0%, an artifact of the dual-class structure.
Retail Ownership: ~18.65% retail — an elevated retail base for a beaten-down DTC name, which adds to headline-driven volatility around earnings.
Buyback as Ownership Lever: The $200M Class A repurchase (with $82M executed in Q1'26, cutting Class A shares ~10.6%) is actively shrinking the public float and is central to the value-support thesis at depressed prices.
No Lockup Overhang: As a 2023 IPO, ODDITY has no lockup-expiration overhang; the share-count dynamic is now driven by buybacks reducing supply rather than insider unlocks adding it.