My Verdict on Hims & Hers Stock -- To The Moon?

Summary

In this video, financial analyst Brian Stul applies the antifragile framework to evaluate 'Hims and Hers Health,' a company simplifying access to prescription medication for sensitive health issues. He assesses the company's mission, moat, optionality, redundancy, single points of failure, skin in the game, and valuation. Despite the company's strong growth and high gross margins, Stul expresses concerns about the sustainability of its moat, especially against potential competition from giants like Amazon. The video concludes with a cautious investment outlook, suggesting that while the company shows promise, its long-term success hinges on maintaining its competitive edge.

Takeaways

• 😀 The video discusses the 'antifragile' framework applied to 'Hims and Hers Health', a company simplifying access to subscription prescription medication.
• 🏥 Hims and Hers Health addresses common health conditions like erectile dysfunction, hair loss, and acne through telehealth, making medical treatment more accessible.
• 📈 The company's stock has performed well, prompting an analysis of its mission, moat, optionality, redundancy, skin in the game, and valuation.
• 🛡️ The company's mission is deemed simple, inspirational, and achievable, scoring full points in the framework's evaluation.
• 💰 Hims and Hers Health shows strong financials with high gross margins, significant revenue growth, and positive free cash flow, indicating a robust business model.
• 🔒 The moat analysis identifies switching costs and brand value as key defensive advantages, though concerns are raised about the sustainability of these moats against potential competition.
• 🌱 The company demonstrates optionality with a variety of new products introduced, resonating with subscribers and contributing to its growth.
• 💡 Redundancy is present with a strong cash position and no debt, suggesting the company could withstand market shocks and potentially benefit from them.
• ⚖️ A single point of failure identified is government regulation, which could significantly impact the company's operations and investment thesis.
• 🤝 The founder's significant ownership and active role in the company, along with insider holdings, signal alignment with shareholder interests.
• 📊 Valuation metrics show the stock is currently trading at a premium, requiring substantial future growth to justify its current price, with concerns about the sustainability of this growth.

Q & A

What is the main service offered by Hims and Hers Health?

Hims and Hers Health provides a subscription-based service for prescription medication for ailments such as erectile dysfunction, hair loss, and acne, making it easier for people to get treatment through telehealth and having prescriptions sent to their homes.

How does the speaker evaluate the mission statement of Hims and Hers Health?

The speaker evaluates the mission statement 'to help the world feel great through the power of health' as simple, inspirational, optionable, and proven, giving it full marks.

What are the five types of moats that the speaker looks for in a company?

The speaker looks for network effect, switching costs, low-cost production, intangible assets, and counter positioning as the five types of moats in a company.

What concerns does the speaker express about Hims and Hers Health's moat?

The speaker expresses concerns about the sustainability of Hims and Hers Health's high gross margins and questions the strength of their brand value, suggesting that a company like Amazon could potentially disrupt their business model with lower prices.

How does the speaker assess the optionality of Hims and Hers Health?

The speaker assesses the optionality by looking at the introduction of new products and services that resonate with subscribers, giving them two out of three points based on the company's ability to launch new products that meet market demand.

What financial metrics does the speaker consider when evaluating redundancy?

The speaker considers cash on hand, debt levels, and free cash flow over the last 12 months to evaluate redundancy.

What potential single point of failure does the speaker identify for Hims and Hers Health?

The speaker identifies government regulation as a potential single point of failure for Hims and Hers Health, given the highly regulated nature of the industry and the company's innovative approach to telehealth.

How does the speaker evaluate the 'skin in the game' for Hims and Hers Health's founder and insiders?

The speaker evaluates 'skin in the game' by looking at the founder's role, insider holdings, and Glassdoor ratings. The founder's active role and significant ownership stake are seen positively, but low Glassdoor ratings lead to a deduction in points.

What valuation metrics does the speaker use to assess Hims and Hers Health's stock?

The speaker uses price to sales, price to earnings, and price to free cash flow ratios, both trailing and forward, to assess the stock's valuation.

What is the speaker's final take on investing in Hims and Hers Health?

The speaker gives Hims and Hers Health a score of seven, indicating it is investable but not a top choice. The main concern is the sustainability of the company's moat and the potential for price competition to affect margins.