Hims & Hers Stock Rises on Fundamentals and Squeeze Potential

There are only a few companies that come around every half-decade or so that really get the gears turning in terms of having the right fundamental makeup for value investors. It just so happens that these companies (when caught early on) are too small to even be on the radar of the bigger sharks in the financial markets, which is where average retail investors get the chance to act on an inherent advantage.

Hims & Hers Health Today

Today’s opportunity comes within the medical sector, though this company has managed to sprinkle just enough technology and innovation to make it a potential disruptor in the industry. This factor has made it past the thesis stage and into the subtle realities of the company and its future, as seen in the key performance indicators (KPIs) within the latest quarterly earnings report.

The company in question is Hims Hers Health Inc (NYSE:), a popular name among retail investors in recent months and quarters. However, that fame has been brought upon the stock by its bullish price action. Far from being the reason investors should focus on the stock, its price action has to be recognized as one of the most exciting in healthcare stocks, nonetheless. Here’s why the stock is worth keeping in the future.

Fundamentals Running Hotter Than Ever

To understand why Hims & Hers is such an attractive opportunity today, investors need to first understand what makes it different. The company has successfully combined elements from traditional medicine and the new and exciting world of telehealth, making it into a business model filled with innovation and rapid user adoption rates.

Speaking of users, the company reported in its quarterly earnings press release that active users reached up to 2.4 million, a net growth rate of as much as 38% over the past 12 months. But, not all users are created equal, as these aren’t the typical one-time users that other companies might boast about.

Hims & Hers users sign up for subscriptions when they join the products and services offered, meaning the company’s management can better forecast and manage its finances than most peers. This dynamic translated into a net revenue growth of as much as 111% over the past year, reaching a high of $586 million.

All of this growth is great, but what matters is how much of this record revenue is kept in the business for further growth avenues and compounding value for the stock. Investors can look at the company’s gross profit margin, which came in at an attractive 73%, allowing for enough capital from each sale to be retained.

That retention brings everyone to free cash flow (operating cash flow minus capital expenditures), one of the most desirable metrics in any early-stage company being considered for investment. This metric clocked in at a record $50.1 million, a near fivefold increase from last year’s $11.9 million.

This growth in free cash flow will eventually translate to higher returns on invested capital (ROIC) rates, which is the one thing most value investors focus on when picking the right companies to back for years to come. Today, even though Hims & Hers is still going through its “growth spurt,” it reports up to 24.6% in ROIC.

That matters because annual stock price performance always tends to match the long-term average ROIC rate, which is precisely where the value compounding comes from.

The Ceiling is Higher For Hims & Hers Stock

After landing a collaboration deal with Novo Nordisk (NYSE:), Hims & Hers has essentially locked in an additional multi-million dollar revenue stream for itself and the recognition it deserves in the broader industry. Because of these two factors, the outlook for the stock’s future looks as good as ever today.

For example, institutional buyers decided to flood the stock with up to $739 million in capital over the past quarter, with an additional $86 million reported for the current quarter (made up of April and May 2025 so far), signaling additional confidence going into the future.

More than that, Hims & Hers reports that up to 33.3% of its shares outstanding are held in short positions, whereby any sudden rally could trigger what’s known as a “short squeeze.” A short squeeze happens when a stock rallies enough to bring short sellers to their maximum pain points, forcing them to close their positions, which requires them to buy the stock.

This is a very real scenario, one that could play out in the coming days and weeks as Wall Street analysts are forced to recognize the amazing growth across the board pushed by the company and potentially boost their valuations and ratings accordingly, creating just the right upside pressure for a fundamentally driven short squeeze.

Original Post