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Hims & Hers (HIMS) is facing headwinds. The stock's down, analysts are hesitant, and even... Hims & Hers (HIMS) is facing headwinds. The stock's down, analysts are hesitant, and even the CEO is selling shares. But is this a temporary dip before another surge, or a sign of deeper problems? Let's dive into the numbers and see what they reveal.
Trendlines and Technicalities
The first piece of the puzzle comes from technical analysis. HIMS is currently trading around $45.53, a far cry from its February high of $72.98. Schaeffer's Research points out that HIMS is nearing its 200-day moving average, a historically bullish signal. In the past, similar setups have resulted in an average gain of 18.2% one month later. A repeat performance would put the stock back near $51.45.
However, past performance is never a guarantee. The stock's history of post-earnings moves is mixed, with more declines than gains in the last eight reports. The average swing is a hefty 13.3%, and investors are pricing in an even larger 17.1% move this time around. This suggests significant uncertainty surrounding the upcoming earnings report on November 3rd.
And this is the part of the report that I find genuinely puzzling. Why such a high implied volatility before earnings? Are investors expecting a major surprise, either positive or negative, or is there something else at play here?
Analyst Sentiment and Insider Moves
Adding to the uncertainty is the pessimistic sentiment from analysts. A large majority, 11 out of 14, have a "hold" or worse rating on the stock. This could be seen as a contrarian indicator, suggesting that there's plenty of room for upgrades if the company performs well. But it also reflects a lack of confidence in the company's current trajectory.
Then there's the elephant in the room: CEO Andrew Dudum's recent sale of 175,661 shares, worth approximately $11 million. While executives sell shares for various reasons (taxes, diversification, etc.), it's never a great look when the person at the top is reducing their stake, especially so close to an earnings announcement. The sale came a day after the launch of Hims & Hers' new menopause and perimenopause service, which makes the timing even more questionable.
Hims & Hers stock has gained over 112% year-to-date and over 138% in the last 12 months. Why Is Hims & Hers Health Stock Down 12% Today?
Beyond the Hype: A Reality Check
Hims & Hers is projecting Q3 revenue between $570 million and $590 million, and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) in the range of $60 million to $70 million. These are solid numbers, but the market is forward-looking. Investors are asking: can Hims & Hers maintain this growth rate?
The telehealth space is becoming increasingly crowded, and competition is fierce. The company's success hinges on its ability to differentiate itself and attract new customers. The launch of the menopause and perimenopause service is a step in the right direction, but it remains to be seen if it will be a significant revenue driver.
One thing to consider: the "Schaeffer's Volatility Scorecard (SVS) of 80" (out of 100). This suggests that HIMS tends to outperform options traders' volatility expectations. In other words, the stock is less volatile than the options market predicts. This could be a positive sign for prospective buyers, as it suggests that the risk of a major downside move may be lower than perceived.
A Coin Toss with Questionable Odds
Ultimately, the decision to buy or sell Hims & Hers stock right now is a gamble. The technical indicators suggest a potential bounce, but the analyst sentiment and insider selling raise red flags. The company's future prospects depend on its ability to execute its growth strategy and navigate the increasingly competitive telehealth landscape. Investors need to weigh the potential rewards against the very real risks before taking the plunge.