Oddity Tech (ODD) told investors its AI-powered beauty platform was thriving. Growth was strong. Guidance kept rising. But behind the scenes, an algorithm change by Oddity’s largest advertising partner altered its ad auctions.
Claim 30% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
A lawsuit filed in federal court alleges that Oddity Tech misled investors about the stability of its digital advertising model while a hidden disruption quietly drove up costs and undermined growth.
A federal complaint filed on March 12, 2026, in the Southern District of New York alleges that Oddity Tech Ltd. and two of its top executives made materially false and misleading statements to investors throughout a class period spanning February 26, 2025, to February 24, 2026. The alleged corrective disclosure came on February 25, 2026, when the company revealed that an algorithm change by its largest advertising partner had diverted its ads to lower-quality auctions at abnormally high costs, sending shares down 49.21% in a single session. Investors who purchased Oddity’s Class A ordinary shares on NASDAQ under the ticker symbol ODD during the class period may have been affected.
If you purchased ODD shares during this period and believe you may have suffered losses, you may wish to learn more about your legal options.
How Oddity Tech Built Its Business Model
Oddity Tech Ltd. is a consumer technology company incorporated under the laws of Israel, with principal executive offices located in Tel Aviv. The company operates digital-first brands in the beauty and wellness industries, serving customers in the U.S. and internationally through what it describes as an AI-driven online platform. According to the complaint, Oddity uses data science, machine learning, and computer vision to identify consumer needs and develop beauty, wellness, and technology products.
The company’s growth model depends heavily on digital advertising. As alleged in the complaint, Oddity’s revenue and customer acquisition costs are directly shaped by the algorithms of its advertising partners, which use behavioral, demographic, and interest-related data to place the company’s ads through online auction systems. The quality of those ad auctions, the complaint explains, directly affects how relevant and prominently placed Oddity’s ads appear to potential customers, and consequently how much the company pays to acquire each new user.
What the Lawsuit Alleges Went Wrong
The complaint centers on Oddity’s relationship with its largest advertising partner and what plaintiffs allege was a material, undisclosed disruption to that relationship. According to the complaint, an algorithm change by that unnamed partner caused Oddity’s ads to be routed to lower-quality auctions at abnormally elevated costs, materially increasing the company’s customer acquisition expenses and degrading the performance of its digital business model.
Plaintiffs allege that throughout the class period, Oddity and its executives overstated the strength, stability, and sustainability of the company’s digital operating model and market position, while failing to disclose that a known and ongoing disruption was eroding the company’s financial prospects. The complaint further alleges that this omission violated SEC Regulation S-K Item 303, which requires public companies to disclose known trends or uncertainties likely to have a material unfavorable impact on revenues or operating income.
To follow developments in this case as it progresses through the courts, consider bookmarking this coverage or checking for updates.
What Executives Said During the Class Period
Throughout 2025, Oddity’s CEO Oran Holtzman and Global CFO Lindsay Drucker Mann issued a series of statements that plaintiffs allege painted an overly optimistic picture of the company’s business. In a February 2025 press release covering full-year 2024 results, Holtzman stated that the company had “proved the power of online” and remained “bullish on ODDITY’s future,” citing strong direct-to-consumer performance and 27% annual net revenue growth.
In quarterly earnings releases covering Q1, Q2, and Q3 of 2025, both executives repeatedly touted results that exceeded the company’s own guidance across revenue, gross margin, adjusted EBITDA, and adjusted earnings per share. Mann stated in the Q2 2025 release that the company’s “agile business model” and “sustained high repeat rates” gave management confidence to raise full-year guidance, which it did consecutively across all three quarters. By the Q3 2025 release, Holtzman described Oddity as “well-positioned for a strong finish in 2025 with multiple engines to drive future growth.” The 2024 annual report, certified by both Individual Defendants pursuant to the Sarbanes-Oxley Act, stated that the company intended to “sustain our high-growth and attractive margin profile.”
When the Truth Allegedly Emerged
The alleged corrective disclosure occurred on February 25, 2026, when Oddity released its fourth quarter and full-year 2025 financial results. In that press 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’s ads to lower-quality auctions at abnormally high costs, resulting in significant increases in new user acquisition costs that the company described as inconsistent with market trends or its own historical experience.
CFO Mann disclosed in the same release that, as a result of this dislocation, the company expected first-quarter 2026 revenue to decline approximately 30% year-over-year. On an earnings call that followed, when an analyst asked when the issue had first emerged, Mann indicated only that the company had observed something different in the second half of 2025, without specifying when the disruption began. On February 25, 2026, Oddity’s Class A ordinary share price declined $14.28 per share, or 49.21%, closing at $14.74.
Why Investors Are Watching This Case
The lawsuit alleges that investors who purchased Oddity shares during the class period did so at artificially inflated prices because the company failed to disclose a material and ongoing deterioration in its advertising economics. The alleged concealment is particularly significant given that the complaint identifies digital advertising performance as a foundational element of Oddity’s business model and customer growth strategy.
The alleged 49.21% single-day share decline following the February 25, 2026, disclosure reflects the scale of the market’s reaction. According to the complaint, analysts at multiple major financial institutions, including Bank of America, JPMorgan Chase, Barclays, Evercore ISI, Needham, Truist, Jefferies, and Citizens, downgraded the stock following the announcement, citing concerns about advertising partner dependency and uncertainty regarding the duration of elevated acquisition costs. Investors who held shares during the class period may face questions about the extent to which their losses are attributable to the alleged omissions.
The Legal Framework Behind the Claims
The complaint brings claims under two provisions of the Securities Exchange Act of 1934. Count I alleges violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, which prohibit materially false or misleading statements and omissions in connection with the purchase or sale of securities. Count II alleges violations of Section 20(a), which extends liability to individuals who exercise control over a company that commits a primary securities law violation.
Plaintiffs allege that CEO Oran Holtzman and CFO Lindsay Drucker Mann, as controlling persons who signed SEC filings and issued public statements during the class period, are liable under both counts. The complaint contends that the Individual Defendants either knew or recklessly disregarded that their public statements were materially misleading in light of the undisclosed advertising disruption.
If you purchased Oddity Tech securities between February 26, 2025, and February 24, 2026, and suffered losses, you may wish to consult legal counsel to understand your rights and options.
About Levi & Korsinsky, LLP
Levi & Korsinsky, LLP is a nationally recognized securities litigation firm representing investors in complex shareholder actions. The firm has extensive expertise and a team of over 70 employees to serve our clients. Attorney advertising. Prior results do not guarantee similar outcomes.
Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. No attorney-client relationship is created by reading this article. Past results do not guarantee similar outcomes.