We're Betting on Hims Even After Harsh Revenues Result
Hims & Hers is focused on self-care. Here's how investors can approach the stock.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Self-care is big business, and it’s getting bigger all the time.
One of the more prominent names in the self-care industry is Hims & Hers Health HIMS. You may have seen their advertisements.
The company’s most popular product is a spray containing medications designed to help with hair loss. Best-selling Hims & Hers products include semaglutide for weight loss, erectile dysfunction medication and a variety of shampoos and facial cleansers.
The result is an online self-care oasis, and investors have taken notice. Shares of Hims & Hers have gained 141% year to date, and have climbed 521% since the stock went public in September 2019.
Revenues Disappointing
After Monday’s closing bell, HIMS handily beat earnings estimates, but came up short on revenues. By Tuesday’s opening bell, the stock was lower by about 13%.
Retail buyers stepped in at the open. Within an hour, Hims & Hers had filled the opening gap, an impressive feat. However, the stock couldn’t hold the gains, and HIMS closed on Tuesday with a 12.4% loss.
Chart Is Still Bullish
Despite Tuesday’s price action, the daily chart for Hims & Hers remains bullish.
Hims & Hers is forming a large ascending triangle pattern (green lines). Based on this pattern, along with the stock’s volatility, shares of Hims and Hers could climb as back to the all-time high of $68.
What’s Our Strategy?
Our strategy is to use the stock’s selloff as an opportunity to initiate a half-sized position at current levels (point A). We’re opening our HIMS position just above the stock’s 50-day moving average (blue).
We will double the size of that position if and when Hims & Hers trades above its all-time closing high of $68.74 (horizontal green line), set in February (point B).
We will not add to the position if the stock fails to close above that level. We'll close the position if the stock breaks the trend line, currently near $50.
What Are the Risks?
Hims & Hers Health is a speculative stock. The San Francisco-based company faces competition from smaller names like LifeMD LFMD, Roman, Keeps and Nurx. In addition, Amazon AMZN has the leverage and scale to undercut Hims & Hers’ prices.
Bottom Line
Hims & Hers has potential, thanks to its name recognition, but it operates in a crowded field. That’s why I’m taking a cautious approach. Hims & Hers has the potential to be a big winner, but we will not hold the stock if it breaks below its trend line.
At the time of publication, Ponsi was long HIMS.
