Two weeks ago, HIMS stock surged nearly 80% at its peak. The trigger was a partnership with Novo Nordisk and the simultaneous withdrawal of the patent lawsuit. On the first day alone, the stock gained more than 50%, with further gains over the following two trading days. My view hasn't changed since. From the intraday high on March 11th, the stock has already fallen 25%. That doesn't surprise me. The business model is promising. But management has burned so much trust over the past few months that this alone is reason enough for me to stay away.

Some background: since 2024, HIMS had built rapid revenue growth on a regulatory loophole. As long as the FDA declared an official shortage of semaglutide, the active ingredient in Ozempic and Wegovy, pharmacies were allowed to produce cheaper compounded versions. HIMS exploited this consistently and used it to generate a large part of its revenue growth. The problem: everyone knew this privilege would eventually expire. When the FDA declared the shortage over in February 2025, HIMS tried to keep operating in a legal gray zone through so-called "personalized dosages." The FDA called it an illegal copy. Novo Nordisk filed a patent lawsuit. The SEC and FTC opened investigations. From its October 2025 high of $65.30, the stock fell nearly 80%.

The Novo Nordisk settlement is a strategic pivot, not a clean break. HIMS is discontinuing its own GLP-1 products and will instead distribute branded originals like Ozempic and Wegovy through its platform. That sounds cleaner than what came before. But the consequences are real: margins will likely drop significantly, because branded drugs are less profitable than compounded products. And whether demand holds up when prices rise is an open question.

There's more: Novo Nordisk explicitly reserved the right to refile the lawsuit. This isn't a fresh start. It's a ceasefire with conditions. The SEC and FTC investigations are still ongoing.

The real problem is sentiment. Every investor who bought between November 2024 and January 2026 is sitting on a loss, in some cases a significant one. For many of them, the rally in early March meant one thing: a chance to exit with smaller losses. That's exactly what we've been seeing since. I consider this selling pressure real and not yet exhausted.

My view changes if three things happen: management proves over several quarters that it executes the new business model with discipline. Margins stabilize at a sustainable level. And the regulatory investigations conclude without major consequences. None of that is visible today.

HIMS is not a bad company. It's a company with a real business model and a management team I don't currently trust. That's reason enough not to buy. But I wouldn't short it either. The stock has already fallen too far, and the risk is too high. HIMS still has an enormous short float, with more than 40% of freely tradable shares sold short. Positive news can trigger a chain reaction and drive the stock sharply higher in a short time. As the explosion in early March showed, short positions in this stock are extremely dangerous.

Disclaimer: This newsletter is for informational purposes only and does not constitute investment advice. I am not a financial advisor. Always do your own research before making any investment decision.

Disclosure: I may hold direct or indirect positions (including options) in any securities mentioned in this newsletter. My opinions are my own and always honest.