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HIMS

Weekend before results: 4,800 FTC complaints disclosed, Polymarket puts odds of a beat below 40%

Sources (4)

The two new items in the last weekend before the Q2 results on 10 Aug (after the close) both point to pressure on the shares. The FTC case puts a number, for the first time, on 5 years of complaints: more than 4,800.

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In May HIMS had already accrued a $15 million reserve for a 'probable loss' but admitted that it 'could be significantly higher', so the true exposure is unknown and skewed higher. Meanwhile Polymarket puts the probability of a beat below 40%, and options imply ±15.2%. At about $30 (it closed at $29.66 on 6 Aug, below the 50-day line), the stock is down more than 50% from its year high of $70.43. Most of the peptide upside and the oversold rebound is already priced in, and the legal overhang from the FTC keeps weighing. With shorts heavily concentrated, a genuine beat would leave fuel for a squeeze, so the risk is large in both directions.

Key evidence

  • More than 4,800 consumer complaints accumulated over 5 years have been disclosed in the FTC case (reported by Inc./Gizmodo): being charged for prescriptions without consent, refunds refused, and money still taken after cancelling
  • In its May securities filing HIMS had already accrued a $15 million reserve for a 'probable loss' and explicitly warned that it 'could be significantly higher'
  • The FTC sued directly on 29 Jul, after rejecting a no-admission-of-fault settlement proposal in May
  • At least 3 shareholder law firms had launched securities fraud investigations (31 Jul)
  • Polymarket puts the probability of a beat in the 10 Aug results at below 40% for each of HIMS, RKLB and QUBT (TipRanks)
  • Options imply a single-day move of ±15.2% (refined on 7 Aug). The 10-year average is ±16.4%, and in only 5 of 16 cases did the actual move exceed the implied one.
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  • Consensus: EPS of -$0.049, revenue of $698.9 million
  • Full-year revenue guidance is $2.8 billion to $3.0 billion. The $15 million reserve is relatively small, but the exposure is unknown.
  • Closed at $29.66 on 6 Aug, below the 50-day line, and down more than 50% from its year high of $70.43
  • Focus: peptide and GLP-1 volumes against the drag from the FTC lawsuit on customer acquisition costs, and margins after the Eucalyptus consolidation

Catalysts to watch

  • 10 Aug after the close: Q2 results (±15.2% implied move)
  • Peptide and GLP-1 volumes coming through
  • Margin disclosure after the Eucalyptus consolidation
  • The actual final cost of the FTC case (possibly significantly more than $15 million)
  • Progress of shareholder class actions

Risks

  • The true legal exposure from the FTC is unknown and skewed higher: the company itself admits it 'could be significantly higher'
  • Securities fraud investigations by 3 or more shareholder law firms add to the pressure
  • Polymarket and options are both sceptical of a beat
  • The break below the 50-day line weakens the technical picture
  • The FTC lawsuit weighs on customer acquisition costs
  • Risk is large in both directions: with shorts heavily concentrated, a beat would leave fuel for a squeeze, and vice versa

Sources 4

  1. Inc./Gizmodo report on 4,800 FTC complaints
  2. HIMS SEC filing, May (probable-loss accrual)
  3. TipRanks, 8 Aug: Polymarket probabilities
  4. earnings-watcher, 7 Aug: options-implied volatility

A brief is a lead for our research, not a verified conclusion or advice.