Short sellers accused of defrauding investors

The strangeness of Il Makiage

Courtesy: Odd

A short seller on Tuesday alleged that the beauty and wellness company Weird technology has been misleading to investors and is not Online only retailer it is declared as such.

Ningi Research Company published a 50-page report which details a series of allegations against New retailer goes public, including that they operated a series of stores in Israel and engaged in fraudulent payment practices. Ningi has a short position in Oddity, but did not disclose the size of that position.

Oddity Tech, the parent company of makeup brand Il Makiage and skincare brand Spoiled Child, has sold to investors on the grounds that it is disrupting the traditional beauty industry by changing the way people Buy makeup online. It markets itself as a pure digital retailer that sells directly to consumers and says it has seen outstanding profits and growth that is very difficult for similar businesses to achieve.

Oddity shares fell more than 12% in premarket trading on Tuesday, albeit on light trading volume. Oddity did not immediately respond to a request for comment from CNBC.

Ningi Research is alleging that Oddity is not a purely digital company and that its Il Makiage brand has more than 40 stores in Israel, where the company is headquartered. Ningi further claims that the majority of Oddity’s profits come from the region – not the US. They said they visited Il Makiage stores in Israel and purchased two of the company’s best-selling products from different locations. It claims the stores are not part of the franchise but are instead owned by the company.

The short seller also alleges that the “secret” to Oddity’s digital growth lies in subscriptions, which Ningi said can be difficult for consumers to get rid of or cancel.

“Sellers tout ODDITY’s ‘impressively high’ repeat purchase rate of 100%, but we don’t buy that. Our research shows that customers unknowingly enroll in plans that cannot be canceled , allowing ODDITY to realize repeat purchases in subsequent quarters even though the customer did not want the product,” the report stated.

It details a series of complaints from the Better Business Bureau and social media from customers who claim they were wrongly charged.

In October, an analyst asked the company about those complaints and whether the problem was happening “on a large scale.” In response, CEO Oran Holtzman said “it’s important to understand the severity of the statement and we’re talking about one percent.”

Oddity previously told CNBC that more than half of its business comes from repeat customers.

“Any online company that does anything close to our sales is going to experience this, like there’s always going to be a certain percentage that’s unhappy,” Holtzman said. He admitted for a “small portion” of his customers, they may be easily confused about the pre-authorization done on their cards in connection with Oddity’s “Try Before You Buy” option – allows customers to try on a makeup item.

“Now, I don’t think it makes sense to roll back this huge benefit to customers because a very small portion of users don’t fully read how it works and are confused,” Holtzman said. . “We’re going to continue to work hard to educate those users, and we’ve invested heavily in the technology around it.”


News 7F: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button