Oddity Tech (ODD) told investors its AI-driven beauty platform was delivering strong growth and profitability. But behind the scenes, something was going very wrong.
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A federal securities lawsuit filed against Oddity Tech Ltd. alleges that the company concealed what plaintiffs describe as a significant disruption in its advertising economics, including sharply higher customer acquisition costs tied to lower-quality ad auctions, causing investors to hold shares at prices that did not reflect the true state of the business.
According to the complaint, Oddity’s reliance on its largest advertising partner left the company exposed to algorithm changes that allegedly drove up customer acquisition costs, a risk that management is accused of failing to disclose even as the company later said it observed something different in the second half of 2025.
The lawsuit covers purchases of Oddity securities between February 26, 2025, and February 24, 2026, a period during which plaintiffs allege the stock traded at artificially inflated prices. On February 25, 2026, Oddity’s share price declined $14.28, or approximately 49%, to close at $14.74 after the company disclosed the extent of the advertising disruption.
If you purchased Oddity securities during the class period, you may wish to learn more about your potential rights in this action.
Oddity Tech: Business Background
Oddity Tech Ltd. is a consumer technology company organized under the laws of Israel, with principal offices in Tel Aviv. The company builds what it describes as digital-first brands in the beauty and wellness industries, serving customers in the United States and internationally through an online platform.
According to the complaint, Oddity relies on data science, machine learning, and computer vision capabilities to identify consumer needs and develop beauty and wellness products. The company’s revenue model depends heavily on its ability to acquire new customers through digital advertising channels, making its relationships with advertising partners central to its financial performance.
The complaint alleges that Oddity’s advertising partners use algorithms that affect the company’s exposure to online ad auctions and, in turn, its customer acquisition costs. These auctions use user behavior, demographic, and interest data to place the company’s advertisements before potential customers. The quality of those auctions directly affects the cost and effectiveness of Oddity’s customer acquisition efforts.
What the Lawsuit Alleges
The lawsuit alleges that throughout the class period, Oddity’s largest advertising partner underwent algorithm changes that began diverting the company’s advertisements to lower-quality auctions at abnormally elevated costs. According to the complaint, higher-quality auctions typically yield more relevant ad placements, lower cost per click, and higher click-through rates, whereas lower-quality auctions produce the opposite results.
Plaintiffs allege that this shift significantly increased Oddity’s customer acquisition costs and undermined the sustainability of its business model, but that management continued to publicly characterize the company’s digital operating model as strong, stable, and capable of sustained growth. The complaint further alleges that Defendants failed to disclose a known trend that had a material adverse impact on the company’s revenues, in violation of SEC disclosure rules.
The suit contends that investors were misled into believing Oddity’s financial performance reflected a durable competitive position, when in fact a concealed advertising problem was quietly eroding the foundation of that performance.
Readers interested in tracking this case can check back for updates as the litigation develops.
Management Statements Cited in the Complaint
The complaint cites a series of quarterly and annual statements in which Oddity’s CEO, Oran Holtzman, and Global CFO, Lindsay Drucker Mann, are alleged to have presented an overly positive picture of the company’s trajectory. In a February 2025 press release accompanying full-year 2024 results, Holtzman described the business as having delivered 27% net revenue growth and said he remained optimistic about the company’s positioning amid the shift toward online commerce and high-performance products.
Following the first quarter 2025 results in April, Holtzman said the results exceeded expectations across all metrics and that the company was set to overdeliver on its financial targets. Mann added that a strong start to the second quarter and high repeat rates gave the company confidence to raise its full-year outlook. Oddity raised its full-year 2025 revenue guidance to between $790 million and $798 million at that time.
After the second-quarter 2025 results in August, Holtzman described continued momentum with another beat-and-raise, and Mann again cited confidence in the repeat-order backlog as the basis for lifting guidance further. The pattern continued into the third-quarter results in November 2025, when Holtzman described strong performance that exceeded guidance and positioned the company as well-prepared for a strong finish to the year.
How the Alleged Truth Emerged
The alleged corrective disclosure occurred on February 25, 2026, when Oddity issued a press release reporting its fourth quarter and full-year 2025 financial results. In that release, CEO Holtzman acknowledged that the company had experienced a dislocation in its account with its largest advertising partner, which he attributed to algorithm changes that diverted Oddity to lower-quality auctions at abnormally high costs.
CFO Mann stated in the same release that, given the dislocation in acquisition costs, the company expected first-quarter 2026 revenue to decline approximately 30% year over year, while expressing hope for improvement in the second half of the year. She added that the company planned to issue a full-year 2026 outlook in the coming months once it had more visibility.
On an earnings call the same day, when asked directly when the problem began, Mann acknowledged only that the company had observed something was different in the second half of 2025, without specifying a more precise start date. On the day of these disclosures, Oddity’s share price dropped from approximately $29.02 to $14.74, a decline of about 49%. Multiple Wall Street analysts subsequently downgraded the stock, citing concerns about the company’s dependence on its advertising partners and uncertainty around the duration of higher acquisition costs.
Why This Case May Matter to Investors
Investors who purchased Oddity shares during the class period paid prices that the lawsuit alleges were artificially inflated by management’s failure to disclose a known advertising problem. When that problem was revealed in February 2026, the stock lost nearly half its value in a single trading session, resulting in substantial losses for shareholders who bought during the period.
The case centers on whether Oddity and its senior executives withheld material information about a trend that was negatively affecting customer acquisition costs, and whether they were obligated under securities law to disclose that trend sooner. The complaint argues that, given the company’s acknowledged dependence on advertising partners, leadership would have been closely monitoring any disruptions in ad auction quality.
The outcome of this litigation could affect investors who held shares throughout the class period and sold at a loss following the disclosure. Shareholders who traded Oddity securities between February 26, 2025, and February 24, 2026, may want to review their transaction records in connection with this action.
Legal Claims Asserted
The complaint asserts claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, which prohibit material misstatements and omissions in connection with the purchase or sale of securities. Plaintiffs allege that Oddity and its officers engaged in a scheme that artificially inflated the market price of the company’s securities by concealing the advertising disruption and its financial impact.
The complaint also brings claims under Section 20(a) of the Exchange Act against the Individual Defendants, Holtzman and Mann, as controlling persons of Oddity, based on allegations that they had the power to control the company’s public statements and disclosures. The plaintiff seeks damages, attorneys’ fees, and other relief on behalf of all investors who purchased Oddity securities during the class period.
If you purchased Oddity securities during the class period and wish to learn more about your legal rights, you may want to consult with a securities attorney to understand your options.
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