HIMS Stock Snaps 2-Day Climb: Analyst Says Record Subscriber Growth ‘Not Enough’ To Offset Margin Slide

Morningstar’s $23 fair value implies a 25% downside, with a 'Very High Uncertainty' rating.

• Hims added a record 307,000 subscribers, but Morningstar said growth was “not enough” to overlook margin declines.
• Q2 revenue rose 38% to $753 million, while adjusted EBITDA fell 27% to $60.3 million.
• International revenue surged over 17x, though Morningstar said the product mix intensified margin pressure.

Shares of Hims & Hers Health, Inc. (HIMS) snapped two sessions of gains on Tuesday as investors focused on deteriorating profitability despite a quarterly revenue beat and record customer additions.

HIMS stock fell 4% on Tuesday and slipped another 0.2% in overnight trading late Tuesday.

HIMS Record Subscriber Haul Fails To Calm Margin Fears

Hims & Hers added 307,000 subscribers sequentially, marking its biggest quarterly increase in at least four years and lifting its global subscriber base to nearly 2.9 million, up 19% year-over-year. Second-quarter (Q2) revenue jumped 38% to $753 million, beating Wall Street’s $730.1 million estimate. However, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 27% to $60.3 million.

Gross margin contracted to 64% from 76%, marking its fourth consecutive quarterly decline. Morningstar said that the subscriber growth was “not enough to overlook continued margin slip,” adding that margin concerns had worsened after Hims lowered its profitability outlook for a second straight quarter.

Morningstar Calls Hims & Hers Moderately Overvalued 

Hims raised its 2026 revenue forecast to between $3.1 billion and $3.3 billion, above the $3.05 billion consensus estimate. It expects third-quarter sales of $880 million to $900 million, also ahead of analysts’ $862.7 million projection. But the company now forecasts full-year adjusted EBITDA of $275 million to $325 million, implying a margin of 9% to 10%.

Morningstar noted that Hims’ latest revenue outlook is 14% above its original forecast, while EBITDA guidance is 12% lower. The expected EBITDA margin has fallen to 9% from an initial projection of about 12%. The research firm maintained its $23 fair value estimate, implying a 25% downside from current levels, and 'Very High Uncertainty' rating, calling the stock moderately overvalued. 

Meanwhile, Deutsche Bank raised its price target on HIMS to $26 from $25, implying a 15% downside from current levels, but maintained a 'Hold' rating, citing the improved revenue outlook alongside weaker profitability.

Hims Weight-Loss Pivot Boosts Sales, Squeezes Margins

Hims’ pivot towards branded weight-loss medications helped drive domestic growth, but the lower-margin product mix pressured profitability. International revenue surged more than 17x to $131 million, accounting for 17% of total sales, up from just 1% a year earlier. The newly acquired Eucalyptus business contributed $40 million during the quarter. 

Morningstar said international contributions were running ahead of expectations but cautioned that margin pressure from the changing portfolio remained more important to the stock’s near-term investment case.

Hims Goes On Offense With AI And New Treatments

Despite the profitability squeeze, Hims is accelerating investments in AI, testosterone therapies, peptides and global infrastructure. CTO Mo Elshenawy said Hims was making AI “load-bearing, not decorative.” Its AI-based Hers weight-loss experience generated three times as many customer messages, answered 80% of questions and reduced certain non-clinical support tasks by nearly 50%.

The company plans to open an AI research lab in Menlo Park and expects testosterone to become its sixth U.S. specialty with an annual revenue run rate over $100 million. CEO Andrew Dudum defended the expansion strategy, saying: “We’re playing offense, and we have the balance sheet and cost structure to sustain it.”

How Do Retail Traders Feel About HIMS?

On Stocktwits, retail sentiment for HIMS was ‘bullish’ amid ‘extremely high’ message volume.

One user said, “$HIMS This dip is buyable. If it drops below 29$ today at open I'm buying more. The problem is the profitablity but the growth is remarkable”

View this Stocktwits post

Another user said, “$HIMS EPS will look much better next quarter with the exclusion of legal fees and aquistion costs. And materially higher EBITDA. I project we flip back to EPS positive in 4Q, possibly breakeven in 3Q assuming no surprises.”

View this Stocktwits post

HIMS stock has declined 39% over the past year. 

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