Adam Spatacco, The Motley Fool
5 min read
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Hims & Hers is the newest darling disrupting the telemedicine space.
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While shares have jumped 157% over the last year, Wall Street analysts don't seem overly bullish on the stock.
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Despite impressive results in the business, Hims & Hers has a high short interest -- making a short-squeeze a possibility.
When it comes to stocks that continue to beat the market, my guess is that your mind goes straight to companies leading the charge in artificial intelligence (AI). Sure, stocks such as Palantir Technologies or CoreWeave remain red-hot in a strong technology sector.
But smart investors understand that there are myriad opportunities beyond the usual suspects in tech. One company that has emerged as a new favorite among investors is telemedicine business Hims & Hers Health (NYSE: HIMS). With shares up 157% over the last 12 months as of market close June 4, Hims & Hers Health looks like the next monster growth stock at the intersection of healthcare and technology.
Let's assess the state of Hims & Hers' business and then take a look at what Wall Street thinks. Is buying shares of this telemedicine darling a good idea right now? Read on to find out.
Hims & Hers is a telemedicine platform that offers patients access to a variety of medications, including for skin care, anxiety, sexual health, and even weight loss.
At the core of the company's business model is a subscription platform. At the end of the first quarter, Hims & Hers boasted 2.4 million subscribers, which represented an increase of 38% year over year. This translated into revenue of $586 million for the quarter, up by a jaw-dropping 111% year over year.
By keeping its business primarily online, Hims & Hers can benefit in a couple of ways.
First, subscription revenue is recurring and therefore carries high gross margins. Second, by keeping its user base using its offerings, the company has the flexibility to spend less on marketing and invest in other areas, such as technology or research and development, in an effort to bolster customer acquisition strategies.
Per management's vision, Hims & Hers is doubling down on investments in AI to get a better sense of its customer data. This could be a savvy move, as it may help the company unlock new expansion opportunities.
While the ideas above paint a picture of a fast-growing, disruptive new solution in the healthcare space, Wall Street doesn't seem totally sold on Hims & Hers just yet.
