By Nicholas G. Miller

Oddity Tech shares sank after the company said that in its account with its largest advertising partner, algorithm changes diverted Oddity to "lower quality auctions at abnormally high costs."

on Wednesday Chief Executive Oran Holtzman said the changes are resulting in significant increases in new user acquisition costs.

The stock dropped 41% to $17 in premarket trading.

"We believe we recently identified the root cause of the problem and have already implemented significant actions that we hope will drive meaningful progress in 2Q and return our acquisition costs to normal levels in 3Q or Q4," Holtzman said.

For the fourth quarter, the company posted net revenue of $153 million, up 24% from the previous year. Adjusted earnings were 20 cents a share, beating Wall Street's forecast of 14 cents a share, according to FactSet.

Write to Nicholas G. Miller at nicholas.miller@wsj.com.

(END) Dow Jones Newswires

February 25, 2026 08:25 ET (13:25 GMT)

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