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Oddity Tech (NASDAQ:ODD) stock is taking a beating on Tuesday after the consumer tech company’s shares were hit hard by a short report from Ningi Research.
The short report from Ningi Research highlights a few alleged problems that the firm has with Oddity Tech. That includes its claims of being an online-only retailer. Ningi Research denies this by saying that the company operates a fleet of physical retail locations.
Ningi Research alledges that Oddity Tech actually operates more than 40 physical retail locations in its home country of Israel. It also claims that this is where much of its business comes from. That’s a stark contrast to its presentation as an online-only retailer with strong sales in the U.S.
Ningi Research also takes issues with the company’s profits and how it generates them. It said the following in its short report.
“In our opinion, the secret to ODDITY’s digital growth is its non-cancelable subscriptions, which customers are lured into via bogus AI quizzes. The sell-side touts ODDITY’s ‘impressively high’ repeat purchase rates of 100 percent, but we don’t buy that. Our research indicates that customers unknowingly enter into non-cancelable plans, allowing ODDITY to recognize repeat purchases in the following quarters even though the customers don’t want the product.”
Investors will also note that Ningi Research says it has taken a short position on ODD stock. The firm doesn’t reveal the size of this position in its short report.
ODD Stock Movement on Tuesday
ODD stock is seeing heavy trading today alongside this short report. That has more than 2.6 million shares of the stock changing hands as of this writing. That’s already above its daily average trading volume of about 1.1 million shares.
ODD stock is down 14.7% as of Tuesday morning and is down 21.6% year-to-date.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.