Why WallStreetBets Favorites Palantir and Hims & Hers Are Slipping in Pre-Market Trading

The pre-market trading session on Tuesday, May 6, 2025, brought unexpected volatility for two stocks closely followed by retail investors: Palantir Technologies (PLTR) and Hims & Hers Health (HIMS). Despite positive Q1 results from both companies, shares of both stocks are set to open lower amid investor skepticism about valuation risks and near-term guidance. Let’s break down what’s driving the declines—and whether they present buying opportunities or red flags.

Palantir’s 9% Premarket Drop: Growth Isn’t Enough to Quell Concerns

Palantir’s Q1 2025 results were undeniably strong: revenue hit $883.86 million, surpassing expectations, and the company raised its full-year revenue growth guidance. The AI-driven data analytics firm also highlighted robust demand for its products in sectors like cybersecurity and defense. Yet, shares fell 9.19% in pre-market trading to $112.40, erasing gains from the prior day’s close of $123.77.

What’s Driving the Sell-Off?
- Valuation Concerns: Palantir’s stock has surged 63.65% year-to-date, but some analysts argue the valuation may have gotten ahead of itself. Jefferies’ Brent Thill noted the stock’s premium multiple could be hard to sustain in a market focused on near-term profitability.
- Mixed Analyst Reactions: While Wedbush’s Dan Ives called Palantir a “transformative AI leader,” others highlighted execution risks in scaling its AI initiatives.
- Sector-Wide Volatility: The broader AI sector has seen sharp swings this year, with investors rotating out of high-growth names amid macroeconomic uncertainties.

Hims & Hers Slips 6% Despite Strong Q1: Guidance Miss and Transition Headwinds

Hims & Hers reported a stellar Q1: revenue hit $585 million, nearly double year-over-year, and beat estimates by $46 million. Adjusted EPS of $0.20 also topped forecasts. Yet, shares fell 6% in pre-market trading to $41.45 (from May 5’s close of $41.88) due to cautious Q2 guidance.

The company forecast Q2 revenue of $530 million–$550 million, missing the $564.57 million consensus. Management cited a temporary decline in sales tied to the transition of customers from semaglutide (a generic alternative used during shortages of Wegovy/Ozempic) to branded treatments or alternatives. This dip, they said, would resolve by late Q2, with growth resuming in the second half.

Why the Skepticism?
- Short-Term Pain for Long-Term Gain: While the semaglutide transition is temporary, investors are penalizing the stock for the near-term revenue drag.
- Valuation Pressure: Despite a 70% YTD gain, HIMS trades at $41.45—still below its 52-week high of $45.20. The market may be demanding clearer visibility into H2 recovery.
- Bullish Sentiment vs. Reality: Stocktwits sentiment remains “extremely bullish,” but trading volumes suggest profit-taking after the strong YTD rally.

Conclusion: Are These Drops Buying Opportunities?

Both Palantir and Hims & Hers face short-term headwinds, but their fundamentals remain intact:
- Palantir: Its AI-driven growth story is credible, with 63.65% YTD gains and a robust order backlog. The Q1 beat and raised guidance suggest execution is on track. Investors may overreact to valuation concerns, creating a buy point if the stock stabilizes below $110.
- Hims & Hers: The Q2 dip is temporary, and its Q1 strength ($585M revenue) underscores long-term potential. The $599/month bundled Wegovy offering with Novo Nordisk and COO Nader Kabbani’s operational expertise position it for H2 recovery.

Final Take: While pre-market declines are sharp, both stocks are still up significantly YTD. Investors should focus on Palantir’s AI momentum and Hims’ strategic moves, not just near-term guidance. For retail traders on WallStreetBets, this could be a chance to average into positions at lower prices—if they’re willing to ride the volatility.

Stay tuned for updates on these stocks as Q2 progresses.