$HIMS is doing it!
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Before I start, I must say, I am a user of $HIMS when it comes to their preventative "hair-loss" lineup. I wish I had an affiliate link to plug to help hedge this trade, but I'm shit out of luck.
Okay, so what's the trade? Why do I think it's a pretty damn good opp, and what is going on?
Well, $HIMS is down 32.54% in the past month and has a current enterprise value of just over 3 billion with a market cap of 3.2 billion. Staircase up and elevator down type of action... somewhat.
Back on June 18th of this year, we had an enterprise value of 5.13B before quickly drifting on off after allegations that the company's GLP-1 weight-loss drugs were sourced from a "shady supplier." This has raised concerns about the quality and safety of their products.
Here's the thing - as long as they don't overspend working on this compound, it really doesn't matter. This isn't their game (at least not yet) instead, "hair-loss" is one of the biggest games in town, and these customers aren't going anywhere! Once you subscribe, you are a subscriber for "life" due to how preventive care works. Just look at $HIMS subscriber growth quarter after quarter.
Number of Subscribers:
Additionally, look at the revenue being brought in. It's honestly absurd that this is trading at Price to Sales of 3.21x with a 5 Year Average of 4.12x. Where should this truly be at over the next few years? 5+ given the valuations that other high growth scalable businesses trade at is my best assumption. (Price to sales is the total value that investors place on the company in comparison to the total revenue generated by the business. The formula is market cap / annual revenue.)
Total Revenue:
These allegations made about their "shady supplier" for their GLP-1 will likely be shrugged off, they will dominate the space and become the go-to brand. Additionally, they have had some issues when it comes to "shortage", but again, this is likely temporary.
Here are some reasons on why $HIMS is crushing it:
- Rapid Growth in Telehealth
- Expanding Product Offerings
- Direct-to-Consumer Model
- Strong Brand Recognition
- Subscription-Based Revenue
- Growth in Teletherapy Services
- Scalable Business Model
- Attractive Valuation
With that said, I feel a little bit sloppy with the timing of this trade being that the "chart" never really sped up to the downside, and there is no true trade for me, other than just being long and sticking with the fundamental thesis that I have. I am currently long from a couple days back and my cost basis is just over 14.80. I'm small enough in which I'm really not paying much attention to it (but it could still turn into something great), and I just want to continue to take it from quarter to quarter and go from there. For now, subscriber growth is incredible, the lineup of products are great, and as long as they don't start over-spending in areas that I can't justify, I am okay with being here for the long haul.
I am going to leave the idea with that. I covered just about everything I wanted, but I'm happy to chat about it more via email - kylevallans@gmail.com
Disclaimer: The content shared on this blog is based on my personal opinions and is intended for informational purposes only. It should not be taken as financial advice. Please conduct your own research or consult with a financial professional before making any investment decisions.