Over the long term, a company’s stock price generally follows the financial performance of its business. When sales and profits grow at healthy rates, stock prices generally follow suit.
But over shorter periods, you can’t necessarily count on business performance that tracks shareholder returns. This is the experience of the shareholders of the technology specialist in the beauty and wellness industry. Weird technology (NASDAQ: ODD) have had since the 2023 of the company IPObut there is reason to believe that Oddity’s languishing stock price could once again keep pace with its revenue and earnings gains.
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The first article of this series on Oddity Tech provided insight into her business and the industry she is trying to disrupt. Here you will learn more about Oddity’s business performance and how this has translated into an attractive long-term opportunity for the company.
Prior to its 2023 IPO, Oddity had generated impressive momentum through its technology platform and 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 just getting started. 2022 was an even more exciting year, with sales up 46% and bottom line jumping more than 50%.
These gains helped generate buzz for the stock during the IPO process. After offering shares at $35, the stock closed on its first day of trading above $47.50 per share. This helped the AI-powered cosmetics developer and e-commerce retailer raise about $425 million for itself and its private equity funding sources.
Shortly after its IPO, Oddity has done an excellent job of maintaining the pace of its growth. Revenue gains in 2023 have actually accelerated from their 2022 growth rate, weighing in at 57%. The increased focus on profitability led to a dramatic increase in margin, including an increase in operating margin from 8.5% to 14.6%. Net income almost tripled to $58.5 million.
Yet investors in IPOs seemed to take these growth rates for granted, leading to lackluster stock performance in 2023 and 2024. And as Oddity’s larger size caused sales gains to slow by 27% in 2024, growth stock investors remained skeptical of the AI beauty company’s long-term prospects.
Oddity’s most recent financial results reflect the continued evolution of its business. Third-quarter 2025 sales increased 24% year over year, with adjusted earnings up 25% to $0.40 per share. These results were higher than the forecasts published by Oddity in its second quarter financial report.
Additionally, Oddity upgraded its outlook for full year 2025. The company now expects net revenue to exceed $800 million and increase approximately 24% to 25% from 2024 levels. Adjusted earnings of $2.10 to $2.12 per share represent an increase of a few cents from previous guidance, and the $90 million in free cash flow of Oddity through the first nine months of 2025 show how the company is generating capital to help fuel its expansion.
Still, Oddity’s stock moves in 2025 reflect popular investing trends and evolving views of the company. Early in the year, enthusiasm for AI-related companies led to a near doubling of the stock price. Yet later in the year, investors appeared to pause over the steps Oddity planned to take to promote its growth, including increased spending on digital marketing and broader concerns about how long the company could maintain an upward trajectory in sales and profits while building out its artificial intelligence capabilities.
In 2026, Oddity still faces significant challenges, but it also has strategic plans that it hopes will generate a new wave of growth. Tomorrow’s final article in this series on Oddity Tech will examine these growth prospects and examine why the stock will be part of the group. Traveler Wallet.
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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 securities mentioned. The Motley Fool has a disclosure policy.
