Hims' 126% Stock Surge: Navigating the Obesity-Drug Gold Rush Amid FDA Turbulence

The obesity-drug market has become a battleground for innovation, regulatory scrutiny, and investor speculation, with Hims & Hers Health (HIMS) emerging as a standout player. The company's stock surged 126% year-to-date as of October 2025, driven by its strategic positioning in a rapidly expanding sector and its ability to adapt to shifting FDA policies. However, this meteoric rise has been anything but linear, marked by regulatory headwinds, partnership disruptions, and a broader debate over the role of compounded drugs in a market dominated by big pharma giants.

The Obesity-Drug Gold Rush: A $55 Billion Opportunity

The global anti-obesity drug market is projected to balloon from $7.14 billion in 2025 to $55.25 billion by 2034, fueled by the success of GLP-1 receptor agonists like Eli Lilly's Zepbound and Novo Nordisk's Wegovy, according to a Goldman Sachs analysis. These drugs, initially developed for diabetes, have become blockbuster weight-loss treatments, with tirzepatide (Zepbound's active ingredient) demonstrating superior efficacy in clinical trials. For Hims, the compounded versions of these drugs-once a lifeline during supply shortages-were a key revenue driver. In Q1 2025, the company reported $230 million in weight-loss-related revenue, contributing to a 111% year-over-year revenue surge to $586 million, according to the company's Q1 2025 results.

Yet the FDA's regulatory interventions have reshaped the landscape. In early 2025, the agency removed Zepbound from its shortage list, forcing compounding pharmacies to halt production of off-brand tirzepatide by February 18, 2025, for 503A pharmacies and March 19, 2025, for 503B facilities, according to an HCH Lawyers post. This decision initially triggered a 15% stock plunge in December 2024 but also compelled Hims to pivot toward telehealth and wellness offerings, diversifying its revenue streams.

Regulatory Whiplash: FDA Scrutiny and Market Volatility

The FDA's actions have been a double-edged sword for Hims. While the agency's crackdown on compounded drugs eliminated a key revenue source, it also underscored the need for innovation. Hims' CEO has emphasized the company's focus on expanding its digital health platform, including mental health services and skincare, to offset the loss of compounded GLP-1 sales. This pivot has resonated with investors, with BTIG analysts maintaining an $85 price target for HIMS, citing its international expansion and product diversification.

However, the stock has faced turbulence. A 35% drop in June 2025 followed the termination of a partnership with Novo Nordisk, which had previously driven a 150% surge in early 2025. The partnership's collapse highlights the fragility of Hims' business model in a market increasingly dominated by pharma giants. Meanwhile, the FDA's recent warning letters to Hims and competitors over alleged marketing exaggerations add another layer of risk; these letters, which target claims about the efficacy of GLP-1 drugs, could dampen consumer demand and introduce regulatory uncertainty, according to a Yahoo Finance report.

Financial Resilience Amid Uncertainty

Despite these challenges, Hims' financials remain robust. The company reported $91.1 million in Adjusted EBITDA for Q1 2025, nearly tripling year-over-year, and updated its 2025 revenue guidance to $2.3–$2.4 billion. Long-term targets include $6.5 billion in revenue by 2030, reflecting confidence in its ability to adapt. This resilience is partly due to its 2.4 million subscriber base, a 38% year-over-year increase, which provides a stable foundation for cross-selling new services.

The broader market dynamics also favor Hims. Goldman Sachs projects the global obesity-drug market to peak at $95 billion by 2030, albeit lower than earlier forecasts, due to evolving pricing dynamics and patient behavior. While Hims lacks the R&D firepower of Eli Lilly or Novo Nordisk, its direct-to-consumer model allows it to capitalize on demand for accessible, affordable alternatives-provided it navigates regulatory hurdles.

The Road Ahead: Balancing Innovation and Compliance

Hims' future hinges on its ability to innovate within a tightening regulatory framework. The FDA's push for standardized medication quality has marginalized compounded drugs, but it has also created opportunities for companies that can offer compliant, cost-effective alternatives. Hims' expansion into telehealth and wellness positions it to capture a broader share of the digital health market, which is expected to grow alongside obesity treatments.

However, risks remain. The FDA's ongoing scrutiny of marketing practices could erode consumer trust, while the dominance of pharma giants in drug development limits Hims' ability to compete on innovation. Investors must also weigh the company's reliance on a single market segment-weight loss-which accounts for a significant portion of its revenue.

Conclusion: A High-Stakes Bet on a Transforming Market

Hims' 126% stock surge reflects both the explosive potential of the obesity-drug market and the company's agility in navigating regulatory turbulence. While the FDA's actions have disrupted its core business, they have also forced Hims to diversify and innovate. For investors, the key question is whether the company can sustain its momentum in a sector increasingly shaped by big pharma and regulatory oversight. With a $6.5 billion revenue target by 2030 and a resilient subscriber base, Hims remains a compelling, albeit volatile, play in the obesity-drug gold rush.