Over the long run, a company’s stock price generally tracks the financial performance of its business. When sales and profits rise at healthy rates, share prices typically follow suit.
But over shorter periods of time, you can’t necessarily count on business performance tracking shareholder returns. That has been the experience that shareholders in beauty and wellness industry technology specialist Oddity Tech (NASDAQ: ODD) have had since the company’s 2023 initial public offering, but there’s reason to believe that Oddity’s languishing stock price could return to following the gains in its revenue and earnings.
Image source: Getty Images.
The first article in this series about Oddity Tech provided an overview of its business and the industry that it’s trying to disrupt. Here, you’ll see more about how Oddity’s business has performed and how that has translated into an attractive long-term opportunity for the company.
Coming into its 2023 IPO, Oddity had generated impressive momentum from its technology platform and its focus on the global beauty and wellness market. From 2020 to 2021, Oddity doubled its revenue and posted positive profits in both years even under generally accepted accounting principles, which is rare for a tech company that’s just getting started. 2022 was an even more exciting year, with 46% sales gains and a jump of more than 50% in net income.
Those gains helped generate buzz for the stock as it went through the IPO process. After offering shares at $35, the stock closed on its first day of trading above $47.50 per share. That helped the AI-powered cosmetics developer and e-commerce retailer raise about $425 million for itself and its private equity funding sources.
Early on after its IPO, Oddity did a great job of keeping up the pace of its growth. 2023 revenue gains actually accelerated from its 2022 growth rate, weighing in at 57%. A greater emphasis on profitability led to dramatic margin expansion, including a jump in operating margin from 8.5% to 14.6%. Net income nearly tripled to $58.5 million.
Yet IPO investors seemed to take those growth rates for granted, leading to middling stock performance in 2023 and 2024. And as Oddity’s larger size led to slower sales gains of 27% in 2024, growth stock investors remained skeptical about the AI beauty company’s long-term prospects.
Oddity’s most recent financial results reflect the ongoing evolution of its business. Third-quarter 2025 sales were up 24% year over year, with adjusted earnings rising 25% to $0.40 per share. Those results were above the high end of the guidance that Oddity had issued in its second-quarter financial report.
Moreover, Oddity boosted its full-year outlook for 2025. The company now expects net revenue to top $800 million and grow roughly 24% to 25% from 2024 levels. Adjusted earnings of $2.10 to $2.12 per share represent an increase from previous guidance of a few pennies, and Oddity’s $90 million in free cash flow over the first nine months of 2025 shows how the business is generating capital to help it fuel further expansion.
Yet 2025’s moves in Oddity’s stock reflected popular investing trends and changing views of the business. Early in the year, excitement about businesses connected with artificial intelligence fueled a near-doubling in the share price. Yet later in the year, investors seemed to take pause at the measures that Oddity planned to take to promote its growth, including greater spending on digital marketing and broader concerns about how long the company could maintain a steep upward trajectory in its sales and profits while advancing its artificial intelligence capabilities.
Coming into 2026, Oddity still faces significant challenges, but it also has strategic plans that it hopes will deliver a new wave of growth. Tomorrow’s final article in this series on Oddity Tech will look at those growth prospects and examine why the stock will be part of the Voyager Portfolio.
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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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