Why Oddity Tech Stock Is Plummeting Today
Key Points
Oddity posted big sales growth and beat revenue and earnings expectations in Q4.
The company guided for a massive sales decline in the current quarter.
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Oddity Tech's (NASDAQ: ODD) share price is getting crushed in Wednesday's daily trading session. The company's share price had plummeted 49.9% as of 3:45 p.m. ET despite a bullish backdrop for the broader market. At the same point in the day's trading, the S&P 500 was up 0.8%, and the Nasdaq Composite was up 1.2%.
Oddity posted its fourth-quarter results before the market opened this morning and actually reported sales and earnings beats for the period. Unfortunately, the company's forward guidance suggested a tougher road ahead for the business.
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Oddity beat Wall Street's Q4 targets
In the fourth quarter, Oddity made a non-GAAP (adjusted) profit per share of $0.20 on revenue of $152.73 million. Earnings per share topped the average analyst estimate by $0.06, and sales topped the estimate by $1.65 million. Sales were up 23.5% year over year in the period, but it looks like revenue is poised to take a big step back in the current quarter.
Revenue is poised for a big decline in Q1
In conjunction with its Q4 report, Oddity provided some color on what to expect in the current quarter -- and it's not surprising that investors are reacting bearishly.
The digital-first tech specialist for brands in the beauty and wellness category is guiding for sales to decline roughly 30% year over year in the current quarter. The company attributed the decline to higher-than-expected acquisition costs and an algorithmic mismatch with one of its major advertising partners. While management said that performance was expected to improve meaningfully later in the year, investors are taking a "show-me" approach after the shocking guidance.
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Keith Noonan 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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