HIMS Stock Faces Wild Swings Ahead of Earnings: Short Squeeze Potential and High Volatility in Focus
Hims & Hers Health Inc (NYSE:HIMS) has been on a roller coaster ride this week, with extreme price swings shaking up investor sentiment. Despite a downgrade from Morgan Stanley to “equal-weight” from “overweight,” the stock surged 17.5% on Tuesday. However, today’s massive 21.5% drop to $52.16 came after the Food and Drug Administration (FDA) announced the resolution of Novo Nordisk’s (NYSE:NVO) weight-loss drug shortage.
Adding to the volatility, HIMS has made a strategic move by acquiring a U.S.-based peptide facility, fueling speculation about its long-term expansion in the healthcare sector. The stock also received two price target hikes, with Deutsche Bank lifting its outlook to $33 and BofA Global Research raising its target to $27.
Stock Performance and Market Sentiment
Despite today’s sharp decline, HIMS remains up 115% year-to-date and boasts an impressive 450% gain over the past 12 months. The stock traded at just $9.22 a year ago but has since skyrocketed, attracting both bullish momentum traders and bearish skeptics. However, with a projected 13% weekly loss, investors are bracing for more turbulence as earnings loom on the horizon.
The company is set to report earnings after the market close on Monday, February 24, and Wall Street is preparing for another dramatic post-earnings reaction. Historically, HIMS has delivered mixed results, with the stock finishing lower five times in its last eight post-earnings sessions. However, its previous February earnings report triggered a massive 31% surge, setting the stage for another high-stakes event.
Options Market Signals Extreme Volatility
Traders betting on HIMS stock should note that the options market is pricing in a 24.6% move in either direction following earnings—significantly higher than the stock’s average two-year post-earnings move of 8.9%. This heightened implied volatility suggests that both bulls and bears are anticipating a major shake-up.
Additionally, bearish sentiment has dominated options trading over the past two weeks. The 10-day put/call volume ratio of 1.94 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) places HIMS in the 97th percentile of its annual range, indicating a surge in bearish bets.
Short Squeeze Potential Remains High
A significant short squeeze could be in play for HIMS stock, given the rising short interest. The most recent data shows that short interest has increased nearly 12%, with 58.21 million shares sold short—representing 31.6% of the stock’s total float. Should earnings exceed expectations or trigger a bullish response, a short-covering rally could send the stock soaring once again.
Analyst Sentiment and Price Targets
Wall Street analysts remain divided on HIMS stock ahead of earnings. Of the 14 brokerage firms covering the stock, nine hold a “hold” or worse rating, signaling skepticism. The average 12-month price target sits at $34.92—roughly 33% below the current trading level. If HIMS delivers a strong earnings report, analysts may be forced to revise their ratings, potentially fueling further volatility.
Bottom Line: Brace for a Wild Ride
With earnings just days away, investors should be prepared for more extreme swings in HIMS stock. The combination of elevated short interest, heavy options market activity, and recent analyst adjustments suggests that the healthcare disruptor could be in for another explosive move. Whether it will be another leg higher or a sharp decline remains to be seen, but one thing is certain—HIMS stock is not for the faint of heart.
