ODD

Executive Summary

AI Beauty Platform at Deep Value After 81% Drawdown

ODDITY Tech is an AI-powered beauty-tech platform operating il Makiage and SpoiledChild, built on 10M+ facial images and 1B+ data points with dermatologist-grade skin analysis. FY2025 delivered $810M revenue (+25% YoY) with 71.6% gross margins and adj. EPS of $2.21, marking 10 consecutive quarters beating guidance. Then the wheels came off: Q1 2026 revenue guided to decline ~30% YoY due to a “dislocation in customer acquisition costs.” The stock cratered 81% from $79 to $10.80, triggering mass analyst downgrades (JP Morgan, Barclays, Needham, Jefferies all cut). At $14.89 the stock trades at just 8.65x trailing P/E and 1.1x LTM revenue with 71% gross margins. This is a high-risk contrarian play: if CAC dislocation is temporary, the asymmetric upside is enormous. If structural, further downside remains. Speculative BUY for risk-tolerant investors.

FY2025 / Q1 2026

Fundamental Analysis — Before the Storm

FY2025 Revenue

$810M

+25% YoY · Record year

FY2025 Adj. EPS

$2.21

Up from $1.96 · +13% YoY

Gross Margin

71.6%

+170bps YoY · Software-like

Trailing P/E

8.65x

Deep value vs. growth history

Q1 2026 Rev Guide

-30% YoY

CAC dislocation · Key risk

Stock Drawdown

-81%

From $79.18 high to $10.80 low

FY2026 Outlook

TBD

No guidance · Waiting for visibility

Market Cap

$860M

1.1x LTM revenue · Deeply discounted

Quarterly Revenue Trend

$169M

Q1 2025

$148M

Q3 2025

$153M

Q4 2025

~$118M

Q1 2026 Est.

Growth Engine

AI Data Moat, DTC Model & Turnaround Thesis

1B+

Data Points Collected

Skin, behavior, formulations

10M+

Unique Facial Images

Hyperspectral imaging tech since 2021

71.6%

Gross Margin

Software-like economics in beauty

Critical — Q1 2026

CAC Dislocation & Revenue Decline

Q1 2026 revenue guided to decline ~30% YoY due to customer acquisition cost disruption. Management has not provided FY2026 guidance. The earnings report (expected soon) will be the most important data point — is this a one-quarter blip or a structural shift in DTC economics?

Near-Term — 2026

CAC Normalization Potential

If the acquisition cost dislocation stems from algorithm changes on Meta/Google or seasonal factors, costs should normalize in Q2-Q3. ODDITY’s proprietary data moat (1B+ data points, hyperspectral imaging) means the product-market fit hasn’t changed — only the cost of reaching customers.

Near-Term

Margin Defense via AI Personalization

71.6% gross margins provide enormous buffer. Even with elevated CAC, ODDITY can maintain profitability at levels that would destroy competitors. The AI recommendation engine (Netflix/TikTok-style personalization for beauty) improves retention and LTV, partially offsetting acquisition cost pressure.

Medium-Term — 2026-2027

International & New Brand Expansion

il Makiage and SpoiledChild have proven the AI-first DTC playbook. The platform is designed to incubate new brands at “software economics” — each new brand leverages the same data infrastructure. International expansion (beyond US/UK) offers geographic diversification away from concentrated CAC markets.

Long-Term

Data Flywheel Compounding

Every customer interaction adds to the 1B+ data point moat. Hyperspectral imaging provides analysis beyond human perception. As the dataset grows, product recommendations improve, retention increases, and CAC efficiency should structurally improve — but this requires time and the current market has zero patience.

Valuation

Price Targets & Scenarios

Scenario	Price Target	Assumptions	Probability
Bull	$55	CAC normalizes by Q2-Q3; revenue rebounds to $750M+; gross margins hold 70%+; stock re-rates to 15x P/E as growth re-accelerates	20%
Base	$35	Partial CAC recovery; FY2026 revenue $600-650M; margins hold; stock stabilizes at 10-12x P/E on reduced but profitable revenue base	45%
Bear	$8	CAC structural; revenue continues declining; cash burn accelerates; DTC model fundamentally broken; retests all-time lows	35%

Probability-Weighted Target: $29.55 (+98% from current)

$30

Weighted

Bull $5520%

Base $3545%

Bear $835%

Analyst Consensus (Post-Downgrades)

High Target

$90 · Buy

Most bullish (pre-CAC)

Consensus Avg

$67 · Buy

11 analysts covering

Median Target

$43 · Hold

Post-downgrade consensus

Low Target

$52 · Hold

Barclays Underweight

8 Buy, 3 Hold, 1 Sell — Median PT $43 (range $52 – $90)

Technical

Key Levels & Options Intelligence

S/RSupport & Resistance

52-Wk High

$79.18

Resistance 1

$32.93

Resistance 2

$29.66

Current

$14.89

52-Wk Low

$10.80

OptOptions & Sentiment

Implied Volatility: 73.5% — very elevated; market pricing in extreme uncertainty around Q1 results
Put/Call OI Ratio: 0.53 — bullish skew; more call open interest than puts despite the selloff
RSI (14): 37.5 — approaching oversold; selling momentum fading near $15 support
Moving Averages: Strong Sell across all timeframes (MA5 through MA200); stock in severe downtrend
Total Open Interest: 16,850 contracts — thin; small-cap liquidity constraints apply
Key Catalyst: Q1 2026 earnings report is THE binary event; will confirm or deny CAC recovery
Volume Pattern: Capitulation volume near $10.80 low suggests forced selling may be complete
Downtrend: No sign of trend reversal yet; falling knife risk remains until Q1 report

Risk & Ownership

Risk Assessment & Insider Signals

!Risk Factors

CAC Dislocation: The #1 risk. Q1 2026 revenue guided down ~30% due to customer acquisition cost disruption. If this is structural (not cyclical), the entire DTC model is challenged. No FY2026 guidance given — management itself lacks visibility.
Platform Dependency: ODDITY relies heavily on Meta and Google for customer acquisition. Algorithm changes, privacy restrictions, or CPM inflation on these platforms directly and immediately impact unit economics.
Mass Analyst Downgrades: JP Morgan, Barclays, Needham, and Jefferies all downgraded in Feb 2026. Institutional exodus may not be complete — forced selling from funds with price/momentum mandates could continue.
Small-Cap Liquidity: $860M market cap with thin options OI (16,850 contracts). Limited institutional interest at current levels means wide bid-ask spreads and volatile price action.
Competitive Pressure: Traditional beauty brands (L’Oréal, Estée Lauder) are adopting AI/ML tools. Amazon entering beauty DTC. The data moat is real but not infinite.
Israel Geopolitical Risk: ODDITY is an Israeli company. Regional instability, sanctions risk, or talent disruption could impact operations. This has been a headwind for Israeli tech broadly.

OOwnership & Insider Signals

Institutional: 81.35% institutional ownership — still heavily held despite drawdown
Top Holder: Baillie Gifford at 10.54% (6.05M shares) — known growth investor willing to hold through volatility
Insider Ownership: Near 0% reported Class A insider holdings; founders hold through different share classes
New Director: Nir Yehoshua filed initial ownership (4,049 shares + 4,596 RSUs) in March 2026 — shows board-level engagement during crisis
Baillie Gifford Signal: The fact that one of the world’s most respected growth investors maintains a 10%+ position despite 81% drawdown is the strongest bullish ownership signal
Retail: 18.65% retail — moderate retail participation, typical for fallen growth names