Oddity Tech (NASDAQ:ODD) plunged in trading following the release of a research report by short-seller Ningi Research. The research house alleges that the consumer tech platform is misleading investors and is not the “online-only” retailer it claims to be.
The report states that the beauty and wellness company runs a large brick-and-mortar business in Israel and has generated sales through “dishonest marketing tactics.”
Details of Ninji’s Report on Oddity
Oddity is the parent company of the makeup brands Il Makiage and Spoiled Child and had claimed it was operating a purely digital, direct-to-consumer model intending to disrupt the legacy beauty industry.
However, Ningi Research has alleged that Oddity is not purely digital, noting that its Il Makiage brand has over 40 company-owned stores in Israel. Moreover, Ningi claims that most of ODD’s profits originate from Israel, not the U.S. Additionally, the short seller stated that it visited the company’s Il Makiage stores in Israel, purchased two of its top products, and confirmed that these stores were not franchises but company-owned.
Furthermore, Ningi has alleged that Oddity’s digital growth is coming from subscriptions that are difficult to cancel. They claim that customers are unknowingly subscribing to these plans, which allows the company to inflate repeat purchases over a few quarters, even when customers no longer want the product.
Previously, the company had claimed that 50% of its business comes from repeat customers.
Is Oddity Stock a Good Buy?
Analysts remain bullish about ODD stock, with a Strong Buy consensus rating based on four Buys and one Hold. Over the past year, ODD has plunged by more than 25%, and the average ODD price target of $54.60 implies an upside potential of 51.8% from current levels.
