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At the time of writing, HIMS has pared its earlier losses and currently sits over 3% above Wednesday’s close.
The short-selling firm highlighted various concerns they have with the business, including its image presented to investors not matching reality, the company operating on shaky ground concerning the corporate practice of medicine provisions, and how the company has positioned itself.
“We believe the image of its business presented to investors does not match reality and that fundamental changes to ED medication now becoming FDA approved for OTC sales (i.e. not requiring a HIMS prescription) are increasingly likely to thwart its revenue growth,” wrote Spruce Point.
The firm also claims HIMS has “serious operational risks and embarrassing quality control issues” impacting a large portion of the pharmacy supply chain it uses.
“We believe HIMS faces enormous competition while having developed no sustainable advantages beyond its brand,” the firm said, adding that the stock trades at a premium to its peers.
