Hims & Hers: A Rare GARP Setup After the Market Reset

The selloff in Hims & Hers Health (HIMS) in early 2025, which saw shares plummet 28% following the company's announcement to discontinue compounded semaglutide offerings, has created a compelling inflection point for investors. While short-term bearish sentiment dominates, the confluence of decelerating GLP-1 growth, core business resilience, and oversold technical conditions at $40 suggests a rare growth-at-a-reasonable-price (GARP) opportunity. This article examines how the recent market reset has priced in near-term risks while underestimating the company's long-term potential.

The Catalyst: GLP-1 Deceleration and Margin Pressures

Hims & Hers' Q4 2024 results underscored both its strengths and vulnerabilities. Revenue surged 95% year-over-year to $481 million, with GLP-1 offerings contributing $225 million in 2024. However, the end of the compounded semaglutide shortage-a key driver of this segment-triggered investor anxiety. The company's decision to pivot to alternatives like oral medications and liraglutide, while prudent, raised questions about supply chain limitations and reimbursement rates.

Gross margins fell to 77% in Q4 2024 from 83% in 2023, further fueling pessimism. Yet, management expects margins to recover in Q2 2025 as it scales these new offerings. This transition phase, while disruptive, is not terminal. The company's 2025 revenue guidance of $2.3–$2.4 billion-a 59% growth on the low end-exceeds Wall Street expectations, suggesting the core business remains robust.

Technical Indicators: Oversold at $40, but Mixed Signals Now

The February 2025 selloff pushed HIMS to $40, a level where technical indicators suggested oversold conditions. The RSI dipped to 36.52, and the Stochastic oscillator hit 9.25, while the MACD turned bearish. These metrics, combined with the stock trading below its 20-day and 50-day moving averages, justified the sharp correction.

However, as of December 2025, the technical picture has evolved. The RSI is now neutral at 46.901, and the Stochastic oscillator at 41.221 signals a sell. Moving averages remain mixed, with short-term indicators (5-day, 10-day) suggesting a buy, while longer-term averages (20-day and above) lean bearish. Despite this, the stock's 1-day projection of a 2.55% increase and a 2026 forecast of 132.93% growth hint at untapped potential. The current price of $33.41 as of January 2, 2026, represents a discount to the $40 oversold level, offering a margin of safety for patient investors.

Institutional Re-Entry and Retail Optimism

The selloff has created a dislocation between fundamentals and sentiment. While institutional investors initially fled, retail traders on platforms like Stocktwits remain bullish, with 63% anticipating a post-earnings rebound. This optimism is grounded in Hims & Hers' broader platform strategy, which extends beyond weight loss to include men's and women's health, skincare, and mental health services.

Institutional re-entry is also gaining traction. The company's Q2 2025 performance-73% year-over-year revenue growth to $544.8 million and a net income of $42.5 million has begun to reassure investors. Analysts acknowledge execution risks, including competition from branded GLP-1 alternatives, but the company's projected $725 million in weight-loss revenue for 2025 (excluding compounded semaglutide) demonstrates adaptability.

The GARP Case: Balancing Risks and Rewards

Hims & Hers' valuation now reflects near-term challenges but not its long-term potential. At a price-to-sales ratio of approximately 3.5x (based on 2025 guidance), the stock trades at a discount to peers in the digital health sector. The company's ability to diversify its revenue streams-e.g., expanding into oral medications and liraglutide-reduces reliance on any single product line.

Critics argue that margin pressures and regulatory scrutiny could persist. Yet, the December 2025 technical indicators, including a bullish divergence in RSI and MACD, suggest the stock may be nearing a bottom. For growth investors, the key question is whether the market has overcorrected.

Conclusion: A Catalyst for Re-Rating

The February 2025 selloff was a necessary correction, but it has created an asymmetric setup. Hims & Hers' core business remains intact, its guidance is credible, and its technicals suggest a potential rebound. While risks remain-particularly in the GLP-1 segment-the company's broader platform strategy and institutional re-entry make it a compelling GARP candidate. For investors with a 12–18 month horizon, the current price offers a compelling entry point to capitalize on a re-rating.