Revenue Drop Sparks Share Rally
Oddity Tech Shares Rise Despite Sharp Second-Quarter Revenue Decline
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Key Points
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ODDITY reported a second-quarter operating loss of $1.26 million, compared with operating income of $57.09 million a year earlier; net income declined 74% to $12.89 million, or $0.24 per share, from $49.29 million, or $0.79 per share.
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The company’s second-quarter adjusted EBITDA was approximately $13 million, and it ended June with $350 million in credit facilities still undrawn, providing additional liquidity beyond its reported cash, cash equivalents and investments.
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METHODIQ’s first-year net revenue is now expected to exceed SpoiledChild’s first-year revenue, indicating stronger early brand performance than management had previously anticipated.
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Analyst sentiment remained especially cautious: nine analysts rated ODDITY a Hold and four rated it Sell, producing an average MarketBeat rating of “Reduce” and a consensus price target of $25.75; Goldman Sachs cut its rating to Sell and lowered its target to $8.
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Insider trading has been entirely one-sided over the past six months: CFO Mann Lindsay Drucker made 12 sales and no purchases, selling 201,261 shares for an estimated $2.995 million.
ODDITY Tech reported second-quarter revenue of $181 million, down 25% year over year, as its largest beauty brand IL MAKIAGE struggled with a major advertising-algorithm disruption. Net income plummeted 74% to $13 million, or $0.24 per share, from $49 million a year earlier Yahoo Finance, yet shares surged 14% after management signaled a sharp revenue recovery ahead.
Management expects Q3 revenue to decline just 5% — a dramatic turnaround from the 25% drops in Q1 and Q2 — even as full-year 2026 revenue is forecast to fall about 19%. Smaller brands SpoiledChild and METHODIQ are firing on all cylinders, with SpoiledChild projected to grow at least 35% this year GuruFocus, offering a path out of ODDITY's current downturn.
IL MAKIAGE's Algorithm Disruption Tanks Q2 Profit
ODDITY's largest brand hit a wall when its main advertising partner's algorithm broke down, scattering its audience and forcing the company to spend far more to acquire new customers Yahoo Finance. The result: an operating loss of $1.26 million in Q2, versus operating income of $57 million a year ago. Adjusted EBITDA fell to just $13 million from much higher levels in the prior-year quarter.
Smaller Brands Emerge as Growth Engines
While IL MAKIAGE stumbled, ODDITY's newer beauty brands are thriving. SpoiledChild posted double-digit growth in Q2 and is expected to expand at least 35% across all of 2026. Even more impressive: METHODIQ, the company's newest brand, is on track to generate more first-year revenue than SpoiledChild did in its debut year GuruFocus, suggesting management's ability to build successful new labels remains strong.
Recovery Signals Underway, But Wall Street Remains Skeptical
ODDITY ended Q2 with $561 million in cash and undrawn credit facilities worth $350 million, giving it substantial liquidity to weather the downturn. The company spent $80 million buying back Class A shares and retired $50 million of exchangeable notes Yahoo Finance. Still, analyst sentiment is mixed: nine rated the stock Hold and four rated it Sell, with Goldman Sachs slashing its rating to Sell and its price target to just $8.
Inside Trading Tells a Worrying Story
CFO Lindsay Drucker has sold 201,261 shares over the past six months for roughly $3 million — and made zero purchases. The one-way insider trading pattern suggests the executive may lack confidence in near-term recovery, even as management publicly projects a sharp turnaround in Q3 and beyond.
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