Key Takeaways:
- Algorithm Disruption: A technical breakdown with Oddity’s largest ad partner caused IL MAKIAGE’s customer acquisition costs to nearly double, crushing first-order growth.
- Price Projection: Based on current assumptions, ODD stock could reach $17 by December 2028.
- Potential Gains: That target points to a 49% total return from the current price of $11.72.
- Annual Return: Investors could see roughly 17% growth each year over the next 2.5 years.
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Oddity Tech (ODD) had a painful Q1 in 2026. Revenue fell 26% year-over-year as a technical breakdown in its largest ad platform sent customer acquisition costs soaring. First orders dropped roughly 50%. The business did not break down. The ad algorithm did.
- Repeat orders accounted for about two-thirds of revenue, reflecting the loyalty of existing customers.
- Gross margin compressed to 69.7%, partly from test-and-learn remediation activity during the quarter.
- Adjusted EBITDA came in at negative $7 million.
- The company repurchased roughly 6 million shares for about $82 million, reducing share count by around 10%.
- May showed the first sequential improvement in cost per acquisition in months, declining by an estimated 28% from April.
Oddity trades at $11.72, down sharply from its prior highs. Investors who believe this is a temporary, fixable problem rather than a structural breakdown face a highly binary bet.
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What the Model Says for Oddity Tech Stock
We looked at Oddity as a digitally native beauty company hit by a problem unrelated to its products, customers, or brand health.
The core of the business is strong. Repeat revenue on a 12-month cohort basis remains above 100%. Existing customers are still buying more. The platform that generates revenue from returning customers has not broken. What broke was the algorithm that finds new ones.
CEO Oran Holtzman described the issue as a technical anomaly. Customer acquisition costs in some months ran at 2x normal levels simultaneously across the U.S., Canada, the U.K., Australia, and Israel.
Management argues that no brand-specific event could cause such a simultaneous breakdown across five markets. The ad partner itself estimated it can recover 40% to 60% of the cost-per-acquisition improvement through its own system fixes.
New brand METHODIQ, launched late last year, is on track to deliver $25 million in revenue this year. That is in line with SpoiledChild’s year-one performance, which later grew into a meaningful contributor.
Using a -1% revenue assumption for the near term and 5.4% operating margins, the guided model projects the stock reaching $17 by December 2028.
This assumes a 23.3x price-to-earnings multiple, flat with today’s forward P/E of 23.3x. The model reflects a cautious view, given the lack of visibility on when the algorithm normalizes.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for ODD stock:
1. Revenue Growth: -1%
The guided model assumes flat-to-slightly negative revenue in the near term, given ongoing ad disruption.
Before the breakdown, Oddity grew revenue 25% in the past year and 35% annually over three years. Management hopes to return to 20% revenue growth and 20% adjusted EBITDA margins once the algorithm normalizes.
Q2 guidance calls for revenue down 25% to 30%, with management expecting full-year adjusted EBITDA to remain positive.
2. Operating margins: 5.4%
EBIT margins were just below 20% in the trailing year and averaged 20% over three years.
The current margin compression is driven entirely by operating deleverage on lower revenue and elevated acquisition costs.
Once first-order volume recovers, margins should rise sharply given the business’s fixed-cost nature.
3. Exit P/E Multiple: 23.3x
Oddity trades near 23x forward earnings today. We hold the multiple flat. Historical averages have been around 24–25x.
Any return to revenue growth could push the multiple meaningfully higher, given the company’s track record.
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What Happens If Things Go Better or Worse?
Oddity faces binary risk tied to a single technical variable. Here’s how the stock might perform under different scenarios through December 2030:
- Low Case: If revenue recovers slowly at 3% a year and net margins settle near 6.5%, investors still see a 99.1% total return (16.3% annually).
- Mid Case: With 3.2% growth and 7.2% margins, the model points to a 171.4% total return (24.5% annually).
- High Case: If the algorithm fully normalizes and drives 3.5% growth with 7.7% margins, returns could hit 257.6% total (32.3% annually).
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The range is wide because timing is everything.
In the low case, the algorithm fix takes longer than expected, the 2026 cohort of new customers is permanently lost, and the impact spills into 2027.
In the high case, May’s improvement compounds through the second half, METHODIQ scales, and Oddity returns to double-digit revenue growth with margins back above 20%.
How Much Upside Does Oddity Tech Stock Have From Here?
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- Operating Margins
- Exit P/E Multiple
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
