Oddity shares plummeted 36% in premarket trading after the company revealed a disruption with its largest advertising partner. The algorithm changes drove customer acquisition costs abnormally high, creating a sudden and unexpected challenge for the beauty e-commerce platform that had been growing steadily through 2025. Investors reacted sharply to the unexpected operational issue.

The ad issue will cut first-quarter revenue by approximately 30% year over year, according to management. Co-founder and CEO Oran Holtzman stated they've identified the root cause and implemented fixes targeting meaningful progress in Q2 and normal CAC levels by Q3 or Q4. The company's 2024 growth trajectory appears interrupted by this technical problem.

Despite the near-term setback, Oddity's Q4 results showed net revenue increased 24% to $153 million, beating estimates. Full-year 2025 revenue reached $810 million, up 25% annually. Management emphasized underlying demand indicators remain strong and there's no change to strategy, though they'll delay full-year 2026 guidance until visibility improves.