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Will Hims & Hers Stock Be Okay After UnitedHealth's Sell-Off? 
When investors choose to risk their capital in an individual company, they must be aware that the stock market isn’t the one-sided machine it used to be a few decades ago. Thanks to the flow of information and availability in the digital space, today's market has become more interconnected than ever before. While that may increase the number of opportunities available to every investor, one major tradeoff must be considered. With more investment opportunities comes greater risk, which may not have been as apparent as the “machine” grows larger and more complex. In the medical sector, for instance, negative headlines or price action in a single stock can ripple widely, as seen with UnitedHealth Group (NYSE: UNH), which has plunged 30.6% in just the past month. This decline in one of the sector’s biggest names immediately affected smaller companies, creating some worry and doubt as to whether things will turn out to be alright during this new volatility. This is where shares of Hims & Hers Health Inc. (NYSE: HIMS) come into play, as investors now consider the future of this stock and whether it will remain affected by the negativity around UnitedHealth. I thought what happened 25 years ago was a once- in-a-lifetime event… but how wrong I was.
Because here we are, a quarter of a century later, almost to the exact day, and it's happening again. Here's the full story for you. Is Hims & Hers Stock Immune to Industry-Wide Sell-Offs? This should be the first question investors ask when looking for answers for Hims & Hers stock’s future, and the fact is that there isn’t much overlap in the recent events. It looks like UnitedHealth’s decline was due to a company-specific issue rather than an industry-wide one. Knowing this, there could be a path to clear Hims & Hers into its former highs, considering that the stock still trades at 85% of its 52-week high, leaving enough room for a new bull run to reclaim a higher ceiling today. In terms of price action, it does seem that Hims & Hers was relatively unaffected by the UnitedHealth sell-off; so far, so good. But then comes the question of whether the stock’s 124.6% rally over the past month is sustainable as a future opportunity or whether the company's underlying drivers have already been priced into the valuation today. Fundamentals must answer that question before the market’s take is built into this view. Hims & Hers: The Perfect Business for Volatility It’s no secret that the S&P 500 has been overly volatile over the past month. The onset of new trade tariffs rolled out by President Trump is starting to affect future economic views, and where capital starts to flow in and out. When it comes to Hims & Hers, its business model can be its greatest strength during times like these. By combining the stability of the medical sector with the innovation and growth initiatives that technology can bring, this company seems to offer investors the best of both worlds: an exciting future for their portfolios and a reasonable hedge against today’s uncertainty. Looking at the company’s latest quarterly earnings results, this theme becomes clearer. Bears once thought that this business model hadn’t earned the trust of consumers, given how new and disruptive it is compared to traditional medicine. Yet, the 38% annual growth in subscribers would say otherwise, as 2.4 million users trust this platform. More than just growth, these subscribers offer Hims & Hers investors stability in the form of subscriptions. The company generated up to $586 million in revenue this quarter alone, showing a massive 111% growth rate over the same quarter last year. Having a mix of technology usually allows the company to retain higher margins, which is why investors can see this relatively young company already achieving stable levels of free cash flow (operating cash flow minus capital expenditures) over the past year. Free cash flow matters because it is the lifeblood of future growth and investor benefits like share buybacks and dividends. This is where most of the excitement lies for Hims & Hers stock and its future potential, which is already being reflected in some of the market shifts. More Optimism Lies Ahead For Hims & Hers Leaning on some of these fundamental factors, some market participants have already expressed their optimism for Hims & Hers recently. Investors need only look at the 19.5% boost in holdings by institutional allocators from Northern Trust, bringing their stake to a high of $71.9 million today. On the other hand, they can also notice that Vanguard decreased its position by 8.8%, but that doesn’t necessarily mean bad news. Institutions like Vanguard have a risk mandate, limiting the share that any company can take up in the broader portfolio. Considering that the stock ran up by 120% in the past month, it makes sense that they would sell some to rebalance the portfolio. Therefore, investors can take this as a healthy sign that the stock might be “catching its breath” before moving in the next direction, which, according to the company's fundamental makeup, should be nowhere but higher, even with the UnitedHealth volatility driving the medical sector recently. Written by Gabriel Osorio-Mazilli Read this article online › Further Reading: Did you like this article?  
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