Weekend before results: 4,800 FTC complaints disclosed, Polymarket puts odds of a beat below 40%
The two new items in the last weekend before the Q2 results on 10 Aug (after the close) both point to pressure on the shares. The FTC case puts a number, for the first time, on 5 years of complaints: more than 4,800.
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In May HIMS had already accrued a $15 million reserve for a 'probable loss' but admitted that it 'could be significantly higher', so the true exposure is unknown and skewed higher. Meanwhile Polymarket puts the probability of a beat below 40%, and options imply ±15.2%. At about $30 (it closed at $29.66 on 6 Aug, below the 50-day line), the stock is down more than 50% from its year high of $70.43. Most of the peptide upside and the oversold rebound is already priced in, and the legal overhang from the FTC keeps weighing. With shorts heavily concentrated, a genuine beat would leave fuel for a squeeze, so the risk is large in both directions.
Key evidence
- More than 4,800 consumer complaints accumulated over 5 years have been disclosed in the FTC case (reported by Inc./Gizmodo): being charged for prescriptions without consent, refunds refused, and money still taken after cancelling
- In its May securities filing HIMS had already accrued a $15 million reserve for a 'probable loss' and explicitly warned that it 'could be significantly higher'
- The FTC sued directly on 29 Jul, after rejecting a no-admission-of-fault settlement proposal in May
- At least 3 shareholder law firms had launched securities fraud investigations (31 Jul)
- Polymarket puts the probability of a beat in the 10 Aug results at below 40% for each of HIMS, RKLB and QUBT (TipRanks)
- Options imply a single-day move of ±15.2% (refined on 7 Aug). The 10-year average is ±16.4%, and in only 5 of 16 cases did the actual move exceed the implied one.
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- Consensus: EPS of -$0.049, revenue of $698.9 million
- Full-year revenue guidance is $2.8 billion to $3.0 billion. The $15 million reserve is relatively small, but the exposure is unknown.
- Closed at $29.66 on 6 Aug, below the 50-day line, and down more than 50% from its year high of $70.43
- Focus: peptide and GLP-1 volumes against the drag from the FTC lawsuit on customer acquisition costs, and margins after the Eucalyptus consolidation
Catalysts to watch
- 10 Aug after the close: Q2 results (±15.2% implied move)
- Peptide and GLP-1 volumes coming through
- Margin disclosure after the Eucalyptus consolidation
- The actual final cost of the FTC case (possibly significantly more than $15 million)
- Progress of shareholder class actions
Risks
- The true legal exposure from the FTC is unknown and skewed higher: the company itself admits it 'could be significantly higher'
- Securities fraud investigations by 3 or more shareholder law firms add to the pressure
- Polymarket and options are both sceptical of a beat
- The break below the 50-day line weakens the technical picture
- The FTC lawsuit weighs on customer acquisition costs
- Risk is large in both directions: with shorts heavily concentrated, a beat would leave fuel for a squeeze, and vice versa
Sources (4)
- Inc./Gizmodo report on 4,800 FTC complaints
- HIMS SEC filing, May (probable-loss accrual)
- TipRanks, 8 Aug: Polymarket probabilities
- earnings-watcher, 7 Aug: options-implied volatility
A brief is a lead for our research, not a verified conclusion or advice.