The investment case for telehealth platform Hims & Hers is encountering significant headwinds. Despite continuing to attract new subscribers, the substantial costs associated with its aggressive expansion are now materially impacting profitability. A recent analyst downgrade to a “Sell” rating has intensified pressure on the stock, leaving investors to ponder whether current concerns are justified or if this presents a potential buying opportunity.
Profitability Concerns Take Center Stage
Recent quarterly results present a contradictory narrative. For the third quarter of 2025, Hims & Hers reported a impressive 49% revenue surge to $599 million. However, this top-line strength was dramatically undermined by an 81.3% collapse in earnings per share, which fell to just $0.06. More troubling for the company’s financial health, the gross margin contracted from 79% to 74% even as operational expenses across all segments rose significantly.
Key Financial Pressure Points:
– Earnings per share plummeted from $0.32 to $0.06
– Declining gross margins despite substantial revenue growth
– Marketing and technology costs escalating rapidly
– 2.5 million subscribers (a 21% increase) are generating reduced profitability
Should investors sell immediately? Or is it worth buying Hims & Hers?
Analyst Sentiment Shifts
The growing skepticism around the company’s business model found a clear voice when Wall Street Zen issued a stark recommendation over the weekend. The investment bank downgraded Hims & Hers from “Hold” to “Sell,” signaling deteriorating confidence at a particularly challenging moment for the company. This formal downgrade reflects broader market concerns about the sustainability of its current growth trajectory.
The Cost of Expansion
The fundamental challenge confronting Hims & Hers is whether its growth strategy is economically viable. The company is essentially purchasing its subscriber growth through substantial marketing investments. While these expenditures successfully drive customer acquisition, the accompanying cost inflation is systematically eroding profit margins. Market participants are now critically examining whether this approach can be maintained long-term or if shareholders should prepare for potential disappointment.
The stock has already absorbed considerable downward pressure, trading well below its February peak. The pivotal question for investors remains whether Hims & Hers can successfully balance its aggressive growth objectives with the imperative of achieving sustainable profitability, or if the current optimism will face a harsh reality check.
Ad
Hims & Hers Stock: Buy or Sell?! New Hims & Hers Analysis from November 8 delivers the answer:
The latest Hims & Hers figures speak for themselves: Urgent action needed for Hims & Hers investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from November 8.
Hims & Hers: Buy or sell? Read more here...
