What's driving the roller coaster ride for San Francisco's Hims & Hers stock?
Shares of Hims & Hers have been on a wild ride recently. After a strong earnings report on Monday, the stock surged, only to sharply decline before rebounding again later on Tuesday morning.
What's fueling the roller coaster ride? Several factors appear to be at play.
Founded in 2017, Hims & Hers saw explosive growth during the COVID-19 pandemic by providing direct-to-consumer health care consultations and treatments for conditions like hair loss, erectile dysfunction and weight management. The company, which primarily targets millennials, went public in 2021.
The company reported strong first-quarter earnings that exceeded analysts' expectations. Revenue surged more than 100% year-over-year to $586 million, driven by its expanding telehealth services in areas like hair loss, sexual health and mental well-being. Additionally, Hims & Hers posted a profit of 20 cents per share, surpassing the forecast of 12 cents.
In another key development, Hims & Hers announced Nader Kabbani, a former Amazon executive, would take over as the company's new chief operating officer.
Despite the positive results, the stock dipped in after-hours trading on Monday and only rebounded the following day. The reason? The company issued a cautious outlook for the second quarter, leading to concerns about its ability to maintain momentum.
Hims & Hers expects second-quarter revenue to fall between $530 million and $550 million, below the $564 million that analysts anticipated. The tempered forecast has raised doubts about the company's future growth prospects.
Along with its quarterly results, the San Francisco telehealth company has been making headlines for a variety of reasons.
Andrew Dudum, the CEO and co-founder who grew up in San Francisco's West Portal, faced backlash for donating $1 million to Donald Trump's presidential inaugural committee earlier this year.
The donation sparked criticism from deeply blue San Francisco, and it spilled over to Dudum's local business, George's Donuts & Merriment.
The company also faced criticism over a Super Bowl ad for a compounded version of popular weight loss drugs Wegovy and Ozempic. Critics alleged the ad failed to adequetly disclose risks, side effects and safety information.
Hims & Hers' ability to navigate these challenges will likely play a key role in determining its stock's performance in the coming months.
'We're starting 2025 with incredible momentum,' Dudum said in a statement Monday. 'We're building a platform that puts the individual at the center of every decision and others are taking notice. Over time, we expect wider collaboration across the industry, inclusive of pharmaceutical players, innovative leaders in diagnostic and preventative testing, and world class providers.'
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