High margins are usually indicative of a moat. The DTC model is filled with stories of unhappy customers; the author acknowledges this risk. Another risk is that the company has reached the lowest-cost customers, and growing beyond that base could require much higher marketing expenditures. It will be interesting to see there are any network effects over time; hopefully the company will begin to disclose some data points which will help investors discern such. Thanks to the author for his work; certainly an interesting company!
Oddity is one of the companies I know best and follow the most. Without a doubt, its business model and fundamentals, supported by its results and FCF generation, are evident.
Since I discovered it and presented it in an investment contest on YouTube, I still can't understand why no one in the fintwit community follows it closely and emphasizes what they are achieving quarter after quarter.
In my opinion, as you have presented Oddity, it is a true reflection of what the company is and what it could be in the future if it continues to grow with the quality it is doing and with its ability to reinvest in its own business.
On the negative side, which generates some uncertainty for me, the only drawbacks I can foresee are the launches of new brands and customer satisfaction with the technologies they are developing and acquiring, such as "Voyage81 hyperspectral imaging," which could always harm their brand image. On the other hand, the management's asset allocation with so much available FCF and not wanting to grow more than 20% as they intend, although I like to see that they announced buybacks and those are green shoots.
"The moat of Oddity lies in its advanced technology, substantial user data, and direct-to-consumer model, which collectively create significant barriers for competitors in the beauty and wellness industry."
How can you even prove that this "technology" is a moat? If it really is, why is nobody going to create a better "advance technology, and direct-to-consumer model" in 5 years from now? How can you prove that a winner-takes-all scenario by a bigger fish is not going to happen in the future?
Ehi Osten, good point! There are multiple signs indicating the benefit of owning consumers data is compounding, the improving trend of repeat purchase rate is one of this. And the innovator’s dilemma, as explained, makes me optimistic that legacy players will not catch up soon. With that said, surely we need further proofs and data to validate my thesis, I’ll keep monitoring ODD performance and act accordingly!
Thanks. So, there is no way to tell if there is a moat or not. It's dangeours to claim there is a moat unless you can prove it, IMO . Signs indicating to one thing can continue pointing to that thing until it doesn't, and then a sudden shift happens. This feels more of a speculation rather than an investment, but that's just my opinion. Time will tell. Good luck.
Well, 5% of revenue coming from non digital channels is not a big deal but such a lack in transparency is definitely a red flag… that is what stops me from increasing my allocation to this stock for now. What is your thought?
I wouldn’t call it a red flag, but probably a negligence. They did not have to change any of their financial statements plus I can‘t see strategic relevance.
Still something to watch out for. On the other hand, the high amount of short selling can be seen as an opportunity for a short squeeze, which I believe will come sooner or later provided business develops according to forecasts, I.e. 20% growth in both revenues and profits.
High margins are usually indicative of a moat. The DTC model is filled with stories of unhappy customers; the author acknowledges this risk. Another risk is that the company has reached the lowest-cost customers, and growing beyond that base could require much higher marketing expenditures. It will be interesting to see there are any network effects over time; hopefully the company will begin to disclose some data points which will help investors discern such. Thanks to the author for his work; certainly an interesting company!
Indeed getting more data points would definitely help investors to build more conviction! Thanks for your comment!
Oddity is one of the companies I know best and follow the most. Without a doubt, its business model and fundamentals, supported by its results and FCF generation, are evident.
Since I discovered it and presented it in an investment contest on YouTube, I still can't understand why no one in the fintwit community follows it closely and emphasizes what they are achieving quarter after quarter.
In my opinion, as you have presented Oddity, it is a true reflection of what the company is and what it could be in the future if it continues to grow with the quality it is doing and with its ability to reinvest in its own business.
On the negative side, which generates some uncertainty for me, the only drawbacks I can foresee are the launches of new brands and customer satisfaction with the technologies they are developing and acquiring, such as "Voyage81 hyperspectral imaging," which could always harm their brand image. On the other hand, the management's asset allocation with so much available FCF and not wanting to grow more than 20% as they intend, although I like to see that they announced buybacks and those are green shoots.
Good Job.
Great to hear we share similar thoughts and conviction about Oddity Mike! Indeed it is weird how it is not under fintwit radar yet 🙃
If ODD continues to achieve his goals, he will surely be on the radar soon
"The moat of Oddity lies in its advanced technology, substantial user data, and direct-to-consumer model, which collectively create significant barriers for competitors in the beauty and wellness industry."
How can you even prove that this "technology" is a moat? If it really is, why is nobody going to create a better "advance technology, and direct-to-consumer model" in 5 years from now? How can you prove that a winner-takes-all scenario by a bigger fish is not going to happen in the future?
Cheers
Gotta be honest with you... this writeup seems like it was spoon fed from the company. Pretty sure this company is a scam
Why do you think it’s a scam?
Ehi Osten, good point! There are multiple signs indicating the benefit of owning consumers data is compounding, the improving trend of repeat purchase rate is one of this. And the innovator’s dilemma, as explained, makes me optimistic that legacy players will not catch up soon. With that said, surely we need further proofs and data to validate my thesis, I’ll keep monitoring ODD performance and act accordingly!
Thanks. So, there is no way to tell if there is a moat or not. It's dangeours to claim there is a moat unless you can prove it, IMO . Signs indicating to one thing can continue pointing to that thing until it doesn't, and then a sudden shift happens. This feels more of a speculation rather than an investment, but that's just my opinion. Time will tell. Good luck.
Great and thorough report, btw (the detailed one)! And it certainly doesn’t give me the impression of being biased or „spoon-fed“.
Thanks, Max! I do my best to stay as objective as possible
Any updated thoughts after short report ? Nice article
Well, 5% of revenue coming from non digital channels is not a big deal but such a lack in transparency is definitely a red flag… that is what stops me from increasing my allocation to this stock for now. What is your thought?
I wouldn’t call it a red flag, but probably a negligence. They did not have to change any of their financial statements plus I can‘t see strategic relevance.
Still something to watch out for. On the other hand, the high amount of short selling can be seen as an opportunity for a short squeeze, which I believe will come sooner or later provided business develops according to forecasts, I.e. 20% growth in both revenues and profits.
Agree, they didn’t have anything to gain hiding that information… very weird behaviour, probably just a negligence