In This Article:
We came across a bullish thesis on Oddity Tech Ltd. (ODD) on Substack by Lorenzo Bastianelli. In this article, we will summarize the bulls’ thesis on ODD. Oddity Tech Ltd. (ODD)'s share was trading at $45.70 as of Nov 12th. ODD’s trailing P/E was 28.04 according to Yahoo Finance.
A data analyst using cutting-edge analytics to accurately interpret complex sets of data.
Oddity Tech's recent performance has garnered attention, with the stock surging 20% in the week following its November 7 earnings release, signaling that the market may finally be recognizing its potential. The company reported strong third-quarter results for the period ending September 30, 2024, exceeding its financial guidance across all key metrics. Net revenue reached a record $119 million, reflecting a 26% year-over-year increase, well above its targeted 20% growth. The company also demonstrated an increase in free cash flow per share, a positive indicator for future stock performance. Repeat purchases from loyal customers continued to grow, now accounting for over 50% of revenue, even as the company expanded by more than 25%.
Looking ahead, Oddity is primed for further growth. The company is set to launch two new brands in the second half of 2025—Brand 3, a telehealth platform for skin and body concerns, and Brand 4, which will also cater to its existing customer base. CEO Oran Holtzman shared insights into the progress of Brand 3, including the establishment of a telehealth infrastructure, a physician and pharmacist network, and large-scale consumer studies for testing new products and treatments. This direct-to-consumer platform, coupled with the use of generative AI in treatment planning, is expected to further enhance customer satisfaction and drive growth.
Holtzman also highlighted the strategic importance of Oddity Lab, which now boasts 60 scientists and a newly expanded facility in Kendall Square, Boston. This investment in research and development underscores Oddity's ambition to become one of the largest beauty companies globally. Despite some concerns about the lack of transparency around key performance indicators, the company’s promising financial results and ambitious growth strategy position it for continued success. Oddity’s stock remains undervalued, priced as though it’s in a worst-case scenario, offering investors significant upside potential.
Oddity presents a compelling investment opportunity, with strong consumer loyalty, a promising pipeline of new brands, and an expanding scientific team positioning the company for sustained growth. The recent surge in the stock price, combined with a high short interest of 32.29% as of mid-October, indicates that there could still be significant upside potential. When a stock with high short interest performs well, it can trigger a "short squeeze," forcing short sellers to buy back shares to cover their positions, further driving the price higher. This mix of solid earnings and elevated short interest suggests that the stock may continue to rise as market sentiment shifts and adjusts to the company’s strong fundamentals.