Hims & Hers stock price has imploded this year, erasing some of the gains made in 2024 when it became one of the top-performing companies in the US. HIMS has crashed to $33.35, down by over 54% from its highest point this year. So, why has the telemedicine stock crashed, and what to expect.
Why HIMS stock has plunged
Hims & Hers is a top company that sells healthcare products used by millions of customers in the US. Its strategy is to focus on niche conditions that people have struggled with for years. These conditions include weight loss, hair, anxiety, skin, and sex. Largely, all Americans face at least one of these challenges, giving it a large, addressable market.
The main reason why the Hims stock price has crashed is that its biggest business is under threat. Hims & Hers started offering compounded GLP-1 treatments, which are generic versions of the weight loss products made by companies like Eli Lilly and Novo Nordisk.
The compounded drugs are effective and much cheaper than those made by large companies. Customers pay about $200 for the drugs sold by Hims, much lower than the $1,000 sold by the larger companies.
Hims & Hers is also cheaper than other companies in the industry. The average annual cost of its GLP drugs is $1,980, lower than WW’s $2,208, Henry’s $2,864, Noom’s $3,218, and Ro’s $4,583.
Read more: Will the falling Hims & Hers stock price recover in 2025?
The challenge, however, is that Hims & Hers drugs have not been approved by the FDA, which has sued to stop the tirzepatide sales. In a court ruling this month, a judge sided with the FDA, meaning that, in the longer term, Hims could face a challenge. Hims is running adverts and campaigns pressuring the FDA to allow compounding.
The weight loss division is an important part of Hims business because of its higher margins. Also, unlike other divisions, these customers will remain with the company for a long time. In most cases, stopping to take weight loss products usually leads to more weight gain.
Hims growth has accelerated
The most recent financial results show that Hims & Hers business has surged in the past few quarters, mostly because of its compounded drugs.
Hims & Hers made over $481 million in the fourth quarter, up by 95% from the same period year earlier. This led to an annual revenue of $1.5 billion, a 69% annual increase.
The company also made a net profit of $26 million in the fourth quarter and $126 million in the full year. This growth happened as the number of subscribers surged by 45% to 2.2 million. Most of these subscribers are mostly because of its weight loss products.
Analysts anticipate that this growth will continue in the coming years. The average estimate is that Hims’ revenue will grow by 92% in the first quarter to $535 million and $2.3 billion this year.
Read more: Is the soaring Hims & Hers stock a good investment?
Hims & Hers stock price analysis
HIMS chart by TradingView
The weekly chart shows that the HIMS stock price peaked at $72.9 earlier this year, and has crashed to $33.35. It has remained above the 25-week Exponential Moving Average (EMA), and is above the key support at $25.30
The HIMS stock has moved inside the ascending channel in the past few weeks. Also, the two lines of the MACD indicator have pointed downwards, while the Relative Strength Index (RSI) have pointed downwards.
Therefore, the stock will likely have a strong bullish breakout when the GLP issue cools in the coming weeks. If this happens, the next key resistance point to watch will be at $50, up by almost 50% from the current level.
The post Here’s why Hims & Hers stock price has crashed: buy the dip? appeared first on Invezz
