Oddity: Out of Control
$ODD Q1 2026 ER Update
Everything I wrote in my last article, “Oddity: The Smartest Trade of All Time”, still stands.
I won’t repeat the full thesis here. If you haven’t read it, start there.
This is just a short update after Q1.
Sales declined 26% year over year, slightly better than management’s previous expectation of about -30%, but directionally nothing changed. The damage is real.
Management also said they “remain hopeful” that the business will return to normalization in the second half. That word matters. “Hopeful” tells me this is still not under their control.
There was one encouraging data point: IL Makiage CPA improved in May, declining an estimated 28% from April after multiple months of increases with the same advertising partner.
That could be the first sign of stabilization. But it also shows how serious the problem was. CPA kept getting worse for months, even after management knew what was happening and started taking corrective action.
May could be the turning point. Or not.
The other important update is that Oddity has already shifted 40% of acquisition revenue out of Try Before You Buy and into the standard Buy model.
That is a big deal. TBYB was part of the IL Makiage edge. I don’t know exactly how much of the historical advantage came from it, but it clearly mattered to some degree. If they can move away from it with “no impact on unit economics”, great. But I want to see more proof.
The most concerning part of the call was how much power Meta has over Oddity, and how little accountability Meta has when something breaks.
Oddity was damaged by a Meta algorithm change. Meta is not accountable for that damage. And now Oddity still has to keep spending money on Meta to understand the problem, test fixes, and try to recover.
Without spending, they cannot identify what works. But because the efficiency of that spend is broken, they also cannot simply scale it back up.
That is a very uncomfortable position.
Management also made clear that there is no real alternative at the same scale. Yes, Oddity advertises on other platforms, but their largest ad partner is by far the biggest acquisition channel in U.S. beauty, with more than 50% market share.
In practice, Oddity has no real alternative to Meta for new customer acquisition. They are still completely dependent on it.
This is the core lesson for me.
Oddity built a very powerful D2C engine, but it was more fragile than I appreciated. The company is not broken, and the thesis is not dead, but the acquisition model depends too much on one platform.
Meta changed the rules. Oddity took the damage. Now Oddity has to spend money to figure out how to adapt.
That is not a position of strength.
IlMakiage.com traffic also continued to fall, which confirms why I wanted to monitor it in the first place. It is not perfect, but it looks like a decent proxy for the state of the recovery.
For now, I am leaving my position untouched.
I will keep monitoring web traffic, CPA commentary, and any sign that the business is normalizing. If I make any trade, I will update Business Ontology members first.
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As always, here is the “Deep Dive To Date” (DDTD), that is how the stock is performing since my initial deep dive on the July 16th 2024, when the price was $44.24.
-77%% DDTDPlease note that:
I can be and will be (hopefully not often) WRONG. This is just my personal strategy—NOT FINANCIAL ADVICE. I don’t know your financial or life situation well enough to give any recommendations. Please do your own due diligence and research. Don’t be LAZY.
Be the architect of your own destiny.
Ciao
Lorenzo