Il Makiage parent Oddity Tech crashes 50% after algorithm error sparks revenue warning
Algorithmic mismatch with advertising partner sends customer acquisition costs soaring and forces weak quarterly outlook.
Oddity Tech, the Israeli parent company of beauty brand Il Makiage, plunged about 50% in Nasdaq trading on Wednesday, falling to an all-time low and a market capitalization of roughly $850 million.
The sharp decline began early in the trading session, immediately after the company, controlled by CEO Oren Holtzman, released its fourth-quarter and full-year 2025 results. Although this marked the 11th consecutive quarter in which Oddity beat analysts’ expectations, investors focused instead on a weak forecast for the first quarter of 2026, the company’s decision not to provide full-year guidance, and, most notably, an algorithmic error that significantly hurt performance.
According to Holtzman, the company experienced an algorithmic “mismatch” with a major advertising partner, likely one of the large digital platforms such as TikTok, Instagram, or Google, though the company did not specify which. The error resulted in substantial misallocation of advertising budgets to low-quality bids, driving customer acquisition costs (CAC) to levels “inconsistent with the company’s business model,” the company said.
The immediate impact is expected to be severe. Oddity now forecasts first-quarter 2026 revenue of approximately $188 million, representing a roughly 30% decline and far below analysts’ expectations of $323 million.
“After identifying the root cause in late January, we quickly moved to implement strong remediation actions, primarily around the model infrastructure, that we hope will get us back to the right auctions and ultimately drive improvement in our new user acquisition, with significant progress in Q2 and normalization in Q3 or Q4,” Holtzman said on the earnings call. “These types of algorithm updates are not new and have been ongoing through the years, and we've historically adapted to them. In this case, it was harder than before to identify how these updates were impacting our business, and therefore, it was harder to identify the root cause.”
The company also chose not to provide full-year guidance for 2026, a decision that further unsettled investors, despite reporting record annual revenue of $810 million in 2025.
Wall Street reacted swiftly. Investment bank Jefferies downgraded the stock from “Buy” to “Hold” and slashed its price target by 72%, from $64 to $18, close to the stock’s current trading level of around $14. Jefferies noted that investor confidence in management had been damaged and that the stock would likely remain under pressure until the company demonstrates a recovery.
Oddity has also approved a $103 million share buyback program, which it may use in an effort to stabilize the stock and restore investor confidence.
Oddity went public on Nasdaq in July 2023 at a valuation of $2 billion and reached a peak valuation of approximately $4.3 billion in June 2025. Holtzman, who owns about 23% of the company, has sold roughly $700 million worth of shares over the years, about half of that in May 2025, near the stock’s peak.
Holtzman originally acquired Il Makiage in 2013 for just NIS 12 million, when it was a traditional retail chain. Under Oddity, he transformed it into a technology-driven beauty company focused on data-driven marketing and online customer acquisition.
