Hims & Hers Stock Plunges Despite Record-Breaking Quarterly Performance

The telehealth platform Hims & Hers delivered what appeared to be a stellar third-quarter 2025 earnings report, yet investors responded by sending the stock sharply lower. Despite a 49% revenue surge and robust growth in subscriber numbers, market sentiment turned cautious. This divergence raises a critical question: can the company sustain its ambitious trajectory, or is its remarkable rally approaching a peak?

The expert community is sharply divided on the stock's prospects. Following the earnings release, Bank of America Securities downgraded its rating to "Underperform." In stark contrast, BTIG maintains a bullish $85 price target, suggesting a potential upside exceeding 140%. Other market researchers consider the shares fairly valued at approximately $32. This wide disparity in price targets underscores the fundamental uncertainty surrounding Hims & Hers: is it a disruptive healthcare pioneer or an overvalued entity purchasing growth at a high cost? Institutional investor activity reflects this ambivalence, with 310 firms increasing their holdings while 234 reduced their positions.

Growth Metrics Shine, But Underlying Costs Spark Concern

A surface-level examination of the quarterly results reveals undeniable strength. The company posted $599 million in revenue, surpassing its own high-end guidance of $590 million. Its subscriber base expanded by 21% year-over-year, reaching 2.47 million. Furthermore, revenue per customer advanced by 19% to a monthly average of $80.

However, a deeper analysis uncovers significant pressures. The gross margin contracted substantially, falling from 79% to 74%, primarily driven by lower revenue from specific weight management products. Concurrently, operating expenses ballooned by nearly 46%, with marketing costs alone climbing to $232 million. While the executive team defends these expenditures as essential investments for future expansion, shareholders are increasingly anxious about the timeline to meaningful profitability.

Should investors sell immediately? Or is it worth buying Hims & Hers?

Potential Wegovy Partnership and Competitive Pressures

Adding a layer of strategic intrigue, CEO Andrew Dudum confirmed "active discussions" with Novo Nordisk regarding the distribution of Wegovy, a blockbuster weight-loss drug, through the Hims & Hers platform. The potential inclusion of both injectable and oral versions of the medication could be a transformative development.

The GLP-1 weight-loss drug market represents a multi-billion dollar opportunity. Hims & Hers had previously projected $725 million in revenue from such preparations by 2026. Nevertheless, the competitive landscape is intensifying. The company currently offers personalized Semaglutid versions after regulatory changes prohibited the mass production of generic copies. This niche market could face contraction once original manufacturers like Novo Nordisk resolve their supply chain constraints.

Looking ahead, the management team has reaffirmed its ambitious targets for 2025, forecasting revenue between $2.34 and $2.36 billion. Their long-term vision extends to $6.5 billion in revenue by 2030. Whether the current stock price can justify these lofty projections, or if investors are witnessing a period of market over-exuberance, will likely be determined by the company's performance in the coming quarters.