Why did HIMS and Hers stock fall?

Why did Hims and Hers stock fall?

You’ve probably seen the ads. Whether on your favorite podcast, during a TV show, or in your social media feed, Hims & Hers seems to be everywhere—a clear sign of its growing popularity.

So, it might feel confusing to hear that the Hims & Hers stock has recently taken a dive. If the company is so visible and successful, why is its stock price falling? This question is perfectly logical, and the answer uncovers a fundamental, and often surprising, rule of how the stock market actually works.

It feels like common sense: a well-known company’s stock should go up. In practice, however, a company’s public image and its stock performance can be two very different stories. Brand popularity is important, but what truly moves a stock is how a company’s financial results measure up against what investors expected them to be.

This article breaks down what really drives investor sentiment on HIMS and explains the specific reasons behind the drop. By the end, you’ll understand the simple story behind the complicated-looking charts.

What Does Hims & Hers Actually Do? A 60-Second Explainer

Beyond the clever ads for hair loss and skincare products, Hims & Hers is fundamentally a telehealth company. That’s just a modern term for getting medical care—like consultations with doctors and prescriptions—through your phone or computer instead of in an office. It’s designed to combine the convenience of online shopping with access to licensed healthcare professionals, making the process more private and direct for common health concerns.

The company’s engine runs on a subscription model, much like Netflix or your favorite coffee delivery service. Instead of a one-time purchase, most customers sign up for recurring, monthly shipments of products and ongoing access to medical advice. For the business, this is powerful because it creates a predictable stream of money coming in each month from its base of loyal subscribers.

The Hims & Hers business model is simple: they sell health and wellness products online, primarily through these monthly plans. This is how the company generates its revenue, or total sales. But just having a lot of sales isn’t always enough to keep investors happy. To understand why, you need to know about a crucial concept in the stock market: the “report card” rule.

The “Report Card” Rule: The Most Important Secret of the Stock Market

Every three months, public companies like Hims & Hers have to release an earnings report—essentially, a public report card detailing their performance. It shows their sales (revenue), their spending, and most importantly, their profit. But here’s the secret that trips most people up: a good report card doesn’t automatically mean the stock price goes up. The stock market runs on a completely different rulebook.

Before that report card is ever released, a group of professional financial analysts on Wall Street have already done their homework and published their predictions. These widely-publicized “analyst expectations” are like the entire class guessing you’re going to get an ‘A+’. Investors see these predictions and start buying or selling the stock based on that expected grade, baking the ‘A+’ price in ahead of time.

This creates a simple but powerful dynamic. If the company’s actual earnings report shows they got the ‘A+’ everyone was hoping for, the stock price might not move much—it was already priced for that success. But if they report a ‘B+’, the stock will almost certainly fall. You might think, “But a ‘B+’ is a great grade!” For investors, however, it’s a disappointment compared to what was promised, and that feeling of missing the mark is what drives a stock’s price down.

Finally, the company also issues guidance, which is its own forecast for how it expects to perform in the next quarter. Think of it as the company telling the class whether it expects to get an ‘A’ or a ‘C’ on the next test. A weak guidance can spook investors even more than a slightly missed earnings report, as it signals potential trouble ahead.

So, What Grade Did Hims & Hers Get on Its “Report Card”?

When Hims & Hers released its report, it was a classic case of getting a ‘B+’ when everyone had priced the stock for an ‘A+’. On the surface, the numbers looked fantastic. The company’s revenue—the total money brought in from sales—had grown massively, confirming that the brand is more popular than ever. But in the stock market, “fantastic” isn’t always good enough. Investors were expecting just a little bit more, and that tiny gap between great results and sky-high expectations is what’s known as a revenue miss. It was the first part of the disappointing grade.

Beyond just the total sales, investors looked closely at how Hims & Hers was achieving that growth. They noticed the company was spending a very large amount of money on marketing and advertising to attract all those new customers. Think of it like a new coffee shop giving away free pastries with every coffee; it gets people in the door, but it eats into the money you actually keep. This concern over spending too much to make sales made investors nervous about the company’s long-term profitability, adding another layer of worry.

The market saw two different stories in the company’s report card:

• The Good News: Sales were booming, proving the business model is attracting tons of customers.
• The Worrying News: That growth came at a high cost and still fell just short of Wall Street’s optimistic predictions.

This combination of a slight miss and high spending was enough to send the stock down. But was this a problem unique to Hims, or is the entire telehealth neighborhood struggling?

Is It Just Hims, or Is the Whole Telehealth Neighborhood Struggling?

It’s a great question, and the answer is that Hims is far from alone. Many digital health companies, which became investor darlings during the pandemic, are now facing a tough reality check. Think of it like the sudden boom in home-baking supplies during lockdown; for a while, sales were off the charts. Now that people are back to their normal routines, that explosive demand has naturally settled down. The telehealth industry is experiencing a similar “post-pandemic cooldown,” and this broader trend has caused many telehealth stocks to lose value as investors adjust their expectations for growth.

On top of this industry-wide shift, the telehealth neighborhood has become much more crowded. Hims & Hers is in a head-to-head battle with competitors like Ro, which is targeting the very same customers with very similar services. When multiple companies are fighting for the same slice of the pie, they often have to spend a lot more on advertising just to get noticed. This can create an expensive marketing war that shrinks profits for everyone. Investors worry that this intense competition makes it harder for any single company to dominate, which helps explain why the stock performance for many telehealth players has struggled.

Ultimately, Hims’s disappointing “report card” didn’t happen in a bubble. It was graded against the backdrop of a cooling market and fierce competition. This context is exactly why investors reacted so strongly to the company’s high spending and slight revenue miss. They see these issues not as a one-time blip, but as potential signs of a much tougher fight ahead.

The Two Big Worries Investors Have About Hims & Hers’ Future

Those two big worries boil down to one question: is Hims’s business built on a solid foundation, or is it a house of cards? The first concern is the enormous cost to get a new customer. With so much competition, Hims has to spend a fortune on ads just to be heard over the noise. The second, and more important, worry is its path to profitability—the long-term plan for turning all those impressive sales numbers into actual, sustainable profit that the company can keep.

Think of it this way: if a new restaurant has to offer a “free steak dinner” coupon to get every single person in the door, it might look busy, but it’s losing money on each customer. One of the biggest risks of investing in Hims & Hers is a similar concern. Investors see the massive marketing budget and worry that the company’s growth is being artificially propped up by an expensive ad campaign. If Hims ever has to cut back on advertising, will the customers stop coming?

This leads directly to the ultimate question of profitability. For a long time, investors were happy to fund fast-growing companies that weren’t yet making money, believing profits would come eventually. But that patience is wearing thin across the market. People looking at a HIMS stock forecast for 2024 want to see a clear and convincing map of how the company gets from “spending a lot to grow fast” to “consistently making more than it spends.” This uncertainty is the central reason investors are nervous, and it raises the big question: Will HIMS stock recover from its current slump?

Does This Mean HIMS Stock is a “Good Buy” Now?

With the stock price much lower than it once was, is HIMS stock a good buy now? The honest answer is that there’s no single “yes” or “no” that works for everyone. A better approach is to think like an investor by weighing two powerful forces: potential versus risk.

The best way to frame this is to imagine a balancing scale. On one side, you pile up all the potential: Hims could successfully become a household name in the massive telehealth industry, solve its profitability issues, and watch its stock price soar. This is the optimistic future that a positive HIMS stock forecast for 2024 would be based on. On the other side of the scale, you pile up all the risks we’ve discussed: intense competition, high advertising costs that never go down, and the chance that the company struggles to ever become consistently profitable.

For Hims, the two sides of that scale are clear. The potential is enormous, but the risks are very real. The core question for anyone learning how to analyze telehealth company stocks is deciding which side of that scale you believe is heavier. The answer to “Will HIMS stock recover?” depends entirely on whether the company’s future performance validates the potential or succumbs to the risks.

Ultimately, whether a stock is a “good buy” depends on your own personal financial goals and how much risk you are comfortable taking. An investment that feels like an exciting opportunity to one person might feel like a reckless gamble to another. This article is for educational purposes to help you understand the forces at play—it is not financial advice. But understanding this balance between risk and reward is the first step toward making smarter, more informed decisions.

How to Understand What Really Moves a Stock

So, the mystery isn’t so mysterious after all. You came here wondering how a company you see everywhere could have a falling stock. Now you know the answer has less to do with popularity and more to do with performance versus prediction. Hims & Hers didn’t fail; it simply got a ‘B+’ on a test where investors were expecting an ‘A’.

This “expectations game” is the secret behind almost every major stock movement you read about. It’s the invisible engine that drives prices up or down, and it’s the most important concept for understanding stock prices. This single idea applies to giants like Apple and the newest companies on the market.

Your new knowledge is a powerful lens for the future. The next time you see a financial headline that seems confusing, pause and ask: “What was the story everyone expected to hear?” This simple question is the foundation of analyzing stocks for beginners and will help you decode what’s really happening.

You’ve successfully moved from being puzzled by the news to being “in the know.” You can now see the hidden logic behind the headlines, a skill that’s the cornerstone of any stock market education. You haven’t just learned about one company; you’ve learned how to better understand them all.