ODDITY Tech Ltd. (NASDAQ: ODD) just made a move that greatly spruced up its appearance for investors. The Israeli tech-savvy cosmetics platform took off by 22% after the company publicized its $150 million stock buyback plans and upped its guidance for 2024 Q2. Originally, it projected $56 million for its EBITDA—they’ve raised this to $60 million. The company also forecasts $189 million in second-quarter revenue, which would be 25% YoY growth. It has been just under a year since the ODDITY IPO, which makes this buyback rather unusual. As management sees it, business has been booming, so they see it as a good time. There may be other reasons as well.
What Is The Point Of a Stock Buyback?
The hefty $150 million is a lot for a small-cap company. ODDITY execs may see this as a way to restore public trust following an incident. Back in May, short-seller Ningi Research accused the "online-only" ODDITY of having undisclosed brick-and-mortar storefronts and exaggerating the capabilities of its AI software. The company confirmed the stores but explained that they only accounted for under 5% of revenue and did not affect its financials. It’s also unusual to update guidance in the middle of a quarter, but this could also be seen as a strategy to boost investor confidence.
What Traders Need To Know
Buybacks are typically seen as a good thing, and the big rise in share price confirms this. However, long-term investors should look closely at the bigger picture. Many analysts will point out that brand-new public companies must build credibility, which can take some time. Despite that, a consensus of eight analysts following ODDITY, which includes Goldman Sachs and Morgan Stanley, rate ODD as a Strong Buy, with an average price target of $53.83 and a high estimate of $66. Shares are currently trading up 1.15% at $44.14.
Neither Julie Stoller nor Stocks.News has positions in the stocks mentioned in this article.
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Julie Stoller
Contributing Writer
As a professional writer since 2012, Julie Stoller has covered many industries, from healthcare and technology to consumer products and industrials. She has written about IPOs, spinoffs, ETFs, stock splits, commodities, legislative actions impacting investors, and macroeconomic issues. While keeping up with the latest meme stocks and trends, Julie's special interests are discovering ...