ODD

Executive Summary

Broken Growth Story, Near-Zero EV — All Eyes on the Sept 9 Trough Test

ODDITY's growth story broke in 2026: an algorithm change at its largest advertising partner spiked customer acquisition costs, driving a Q1'26 revenue collapse of -26% to $197.9M, an adjusted loss of -$0.17 vs +$0.01 expected — its first-ever miss — a suspended FY26 outlook, and an -81% one-year share-price decline ($75.45 high to $9.25 low). The stock has since rebounded to $15.53, now sitting 29% above the $11.07 consensus target, with 0 Buys against 7 Holds and 3 Sells and Q2'26 guided down another 25-30%. The bull case rests on the balance sheet and the platform: $667M in cash plus $350M undrawn credit against a $716M market cap leaves near-zero enterprise value, May marked the first sequential CPA recovery since Q4'25, and consensus models a FY27 rebound to $722M revenue and $1.00 EPS. Brand 3 — Methodiq, the telehealth medical-skincare platform powered by ODDITY Labs' AI-discovered ingredients — launched November 2025 with 28 products, and Brand 4 is still slated for 2026, but neither can offset IL MAKIAGE's ad-channel dependence in the near term. The September 9 Q2 print is the pivotal test of whether CPA normalization is real or whether the bear case of structural first-order erosion plays out.

Q1 FY2026 Results

Fundamental Snapshot — The ad-platform CPA shock broke every line of the P&L in Q1'26 — revenue -26%, first-ever earnings miss, negative EBITDA and FCF — leaving the balance sheet as the only intact pillar.

Q1'26 Revenue

$197.9M

-26% YoY (vs $268.1M) — ad-platform CPA shock

Q1'26 Adj. EPS

-$0.17

vs consensus +$0.01 — first miss as a public company

Gross Margin

69.7%

-520 bps YoY — deleverage on lower volume

Adj. EBITDA (Q1'26)

-$7.0M

vs +$52.4M in Q1'25 — swung to a loss

Free Cash Flow (Q1'26)

-$21.1M

vs +$87.3M in Q1'25

Cash & Investments

$667M

+ $350M undrawn credit — cash ≈ 93% of market cap

Q2'26 Guidance

-25-30% YoY

Adj. EBITDA $8-10M · FY26 guidance suspended Feb '26

Order Trends (Q1'26)

-50% / -15%

First orders / repeat orders — May saw first CPA recovery since Q4'25

Quarterly Revenue Trend

$241M

Q2'25

$148M

Q3'25

$153M

Q4'25

$198M

Q1'26

Recovery Watch

From growth darling to near-zero EV — handicapping the FY27 rebound

May '26

First CPA recovery

First sequential customer-acquisition-cost improvement since Q4'25 — management calls it 'progress toward normalization'

28 SKUs

Methodiq (Brand 3) live

Telehealth medical skincare launched Nov '25 — Rx, OTC and cosmetic lines with ODDITY Labs AI-discovered ingredients

+15%

FY27 consensus rebound

$722M revenue and $1.00 EPS modeled for FY27 vs $627M / $0.06 in washed-out FY26

Sep 9, 2026

Q2 2026 earnings — the trough test

Guide: revenue -25-30% YoY, adjusted EBITDA $8-10M. Any upside vs guide plus continued CPA recovery is the key re-rating catalyst.

H2 2026

CPA normalization trajectory

Ad campaigns were pushed into low-quality, high-cost auctions by the largest ad partner's algorithm change; sequential CPA improvement began in May and must hold for first orders (-50% in Q1) to recover.

2026

Brand 4 launch

Fourth ODDITY brand still expected to launch in 2026 per company commentary — a diversification catalyst away from IL MAKIAGE's paid-social dependence.

H2 2026

Methodiq scaling

Brand 3 telehealth platform (acne, hyperpigmentation, eczema; clinician-approved protocols) moves from launch to scale — early cohort data likely on upcoming calls.

Late 2026

FY guidance reinstatement

FY26 outlook suspended Feb 25, 2026 (shares fell ~49% that day). Restoring full-year guidance would signal management confidence in normalized acquisition costs.

Earnings & Signals

Forward Estimates, Surprises & Insider Activity

Forward Earnings Estimates

FY+1 EPS Consensus$0.06

FY+2 EPS Consensus$1.00

PEG Ration/m — earnings reset year

Forward P/E31.4x (15.5x FY27 est.)

EPS Revisions (90d)↑0 ↓10 (Sharply lower — consensus target cut from $17.33 to ~$11, FY26 swung from +$0.61 profit to -$0.49 GAAP loss estimates; Goldman ($16→$8)

Guidance AccuracyBeat its own guidance every quarter of 2025 (revenue, EBITDA and EPS all above range in Q3'25); FY26 guidance suspended Feb '26 after the ad-platform shock — only one quarter ahead now guided

Earnings Surprise Track Record

Q2'25 Est: $0.88 Act: $0.92 +4.5%

Q3'25 Est: $0.35 Act: $0.40 +14.3%

Q4'25 Est: $0.14 Act: $0.20 +42.9%

Q1'26 Est: $0.01 Act: -$0.17 -$0.18 vs est

Beat Rate3/4

Insider Activity (90 Days)

Net Buying/Selling-128,805 shares (~$1.93M net sold) over the trailing 90 days

Sell/Buy RatioAll-sell in the window — dominated by CFO Lindsay Drucker Mann's 109,602-share sale at $15.09 on Jun 30 under a pre-arranged 10b5-1 plan for tax withholding on vesting equity

Neutral

The trailing-90d selling is mechanical (10b5-1 tax-related); the more meaningful signal sits just outside the window — CEO Oran Holtzman's open-market purchase of 857K Class A shares on Mar 3-4, 2026, with a stated intention to preserve control and not sell further.

Peer Comparison

Relative Valuation vs. Competitors

Company	P/E	EV/Rev	Rev Growth	Gross Margin
ODDITY Tech	18.3x	0.9x	+5.1%	71.1%
e.l.f. Beauty	173x	3.1x	+24.6%	70.7%
Estée Lauder	26.5x fwd	2.4x	+0.3%	74.7%
Coty	8.0x fwd	0.9x	-6.0%	63.2%

After a ~78% drawdown, ODD trades at just 0.9x EV/Revenue and 18x trailing earnings — bracketed with struggling Coty rather than growth peer ELF (3.1x) — despite elite 71% gross margins; the market is pricing ODDITY as ex-growth, so any growth re-acceleration against ~28% short interest could force a sharp re-rating.

Valuation

Price Targets & Scenarios

Scenario	Price Target	Assumptions	Probability
Bull Case	$22	CPA fully normalizes into H2'26, Q2 guide proves the trough, FY27 rebound beats the $722M / $1.00 EPS consensus, Methodiq telehealth + Brand 4 launch reignite growth; near-zero enterprise value re-rates on the $667M cash pile — and ~28% short interest fuels the squeeze.	25%
Base Case	$12	Slow grind: Q2'26 revenue falls 25-30% as guided, CPA recovery continues but first-order economics stay impaired; stock settles near the $11.07 consensus target until FY26 guidance is reinstated and FY27 visibility returns.	45%
Bear Case	$8	Goldman/Barclays scenario: ad-platform dependence proves structural, repeat-order base erodes, EBITDA stays negative, cash burn accelerates and the FY27 $1.00 EPS rebound never materializes; retest of the $9.25 low.	30%

Probability-Weighted Target: $13.30 (-14% vs current)

$13.30

Weighted

Bull $2225%

Base $1245%

Bear $830%

Analyst Consensus

Goldman Sachs

Sell — cut from $16 after Q1'26 miss

Morgan Stanley

$10

Equal Weight — cut from $16 (Jun 3, 2026)

Barclays

Underweight — cut from $13 on growth concerns

Truist Securities

$12

Hold — cut from $18, cites ad-algorithm CPA spike

0 Buy · 7 Hold · 3 Sell — Consensus Hold · 10 analysts · avg target $11.07 — 29% BELOW the current price after a broad Street reset (targets range $8–$16)

Technical

Key Levels & Options Intelligence

S/RSupport & Resistance

52W High

$75.45

200-Day MA

$26.70

Resistance (near-term)

$16.45

Current Price

$15.53

50-Day MA

$13.64

Support (volume shelf)

$10.25

52W Low

$9.25

OptOptions & Sentiment

Implied Volatility: 110.8% — IV Rank 76 · 95th percentile of the past year
Put/Call Ratio (Volume): 0.41 — call-skewed session flow
Put/Call Ratio (Open Interest): 0.84 — near-balanced positioning
Short Interest: ~6-8M shares · ≈15% of shares outstanding, ~28% of float
Days to Cover: 14.2 — crowded short, squeeze-prone
RSI (14): ~51 — neutral, recovering off June oversold lows
Trend: -77.7% over 52 weeks · below the 200-day MA, back above the 50-day
Notable Flow: Oct '26 $35 calls — ~8.3K contracts traded, OI 8,783 — lottery-ticket squeeze bets

Conviction Analysis

Systematic Conviction Score: 15/100 (Low)

Analyst Alignment

30%

FCF Visibility

25%

Catalyst Clarity

20%

Valuation Safety

15%

Mgmt Quality

10%

Zero Buy ratings, negative and deteriorating free cash flow, and a share price 29% above the Street's average target leave almost nothing to underwrite. The Sept 9 trough test and the founder's March open-market buy are the only live positives — this is a watch-list name, not a position.

Risk & Ownership

Risk Assessment & Insider Signals

OOwnership & Insider Signals

Institutional ownership · ~107% of float: Institutions hold roughly 107% of the free float (a function of the small float vs total shares plus short-sale rehypothecation), up ~0.5% quarter-over-quarter — institutions have not capitulated despite the drawdown.
Founder control · dual-class: CEO Oran Holtzman holds 13.76M shares (Class A + super-voting Class B) — 24.3% of Class A and 73.3% of combined voting power as of March 2026. Co-founder Shiran Holtzman-Erel holds an additional Class B stake, cementing family control of all shareholder votes.
Top institutions · growth long-only: Baillie Gifford (~7.12M shares), Morgan Stanley Investment Management (~4.06M), and pre-IPO backer L Catterton (~3.54M) anchor the register — a growth-oriented, long-duration holder base.
Short interest · ~28% of float: Roughly 6-8M shares short (≈15% of shares outstanding, ~28% of the small float) with 14.2 days to cover — a heavily shorted setup that cuts both ways: bearish consensus, but squeeze fuel on any CPA normalization.
13F flows · buyers into weakness: Morgan Stanley added 1.19M shares (+27.6%) in Q1 2026 and Baillie Gifford added 1.08M (+17.8%) in Q4 2025, even as hedge-fund holders fell from 31 to 25 portfolios — long-only conviction rising while fast money exits.
Founder buy after the block sale: A Holtzman-affiliated entity sold 5.5M Class A shares in a May 2025 block trade (followed by a 1-year lock-up), but Holtzman then bought 857,084 shares in the open market on March 3-4, 2026 — a rare founder purchase into the drawdown.

Risk Heatmap

Quantified Risk Assessment

Severity Risk Factor Prob. PT Impact

High Ad-platform CPA crisis persists

A technical algorithm change at ODDITY's largest advertising partner (Meta) nearly doubled customer acquisition costs across geographies — the CPA index hit 2.8 in H1 2026 through May, +83% YoY. Management has no confirmed timeline for normalization, and the model's economics break if acquisition costs stay elevated.

55% -35%

High Continued revenue contraction

Q1 2026 revenue fell 26% YoY to $197.9M and Q2 guidance calls for another 25-30% decline. The vaunted beat-and-raise streak is broken — the company posted its first-ever quarterly loss (net loss $21.4M vs $37.8M profit a year ago) and Street models now assume sharply lower growth and margins.

65% -30%

High Cash-flow deterioration

Free cash flow swung to -$21.1M in Q1 2026 from +$87.3M in Q1 2025, and adjusted EBITDA turned negative (-$7.0M). Q2 EBITDA guidance of $8-10M is a fraction of prior-year levels; sustained cash burn would erode the balance-sheet cushion that underpins what remains of the bull case.

50% -20%

Medium Methodiq (Brand 3) execution risk

The Q4-2025 telehealth derm launch is tracking to only ~$25M first-year revenue — immaterial vs the core decline — while pitting ODDITY against entrenched players like Hims & Hers in a regulated telehealth category. The recent CSO exit adds leadership churn during the pivot.

45% -15%

Medium Single-channel concentration

The current crisis exposed structural dependence on one paid-social acquisition channel. Diversifying spend (search, TV, influencer) raises blended CAC and slows growth even in a recovery scenario — the moat narrative around 1B+ data points did not protect unit economics.

60% -15%

Low Dual-class governance overhang

Founders control ~73.3% of combined voting power through super-voting Class B shares, leaving minority holders with no path to force strategic change. With short interest at ~28% of float and hedge-fund holders down from 31 to 25, negative sentiment can compound.

30% -10%

Recommendation

Summary

Rating

SELL

Conviction

Low

Price Target

$13.3

Timeframe

12 mo

Upside

-14%

Position Size

0%-2%

Entry Strategy

Tranche 1 — 40%

~$10.25

Contrarians only: the volume-shelf support from the June base. Do not initiate at current levels — the stock trades 29% above consensus and 17% above our weighted target.

Tranche 2 — 35%

~$9.25

Retest of the 52-week low. With cash ≈ 93% of market cap, enterprise value approaches zero here — the deep-value floor if the Q2 print confirms EBITDA stabilization.

Tranche 3 — 25%

Post-Sep 9

Event-driven add only after the Q2 print shows CPA normalization holding and guidance reinstated — pay up for confirmation rather than averaging into a falling knife.

1-Year Price & Key Levels