Shares of Hims & Hers (HIMS -4.01%) stock sank 17% this week, according to data from S&P Global Market Intelligence. The telehealth platform is delivering huge revenue growth but is at risk of a legal battle with weight loss drugmakers. Shares of the stock are down 25% from all-time highs but are up 400% in the past five years due to the platform's fast growth.
Here's why the stock sank this week.
Fast growth but a looming lawsuit
In the second quarter of 2025, Hims & Hers' revenue grew 73% year over year to over $500 million, making it one of the fastest-growing companies in the world. This was driven by 30% growth in total subscribers to Hims & Hers products and 30% growth in spend per active subscriber. The company offers telehealth services for basic pharmaceuticals such as hair loss, sexual wellness, and weight loss drugs.
While the company is growing quickly and now generating a profit, Hims & Hers is facing a looming legal battle with Novo Nordisk. The innovator in weight loss drugs originally had a partnership with Hims & Hers but pulled out of the deal because of disagreements over Hims & Hers selling knockoffs of its weight loss drug formula. Hims & Hers was permitted to sell patented weight loss drugs while they were in shortage, but now that the shortage is over, it is breaking the law by selling patented drugs to customers at a discount.
Unsurprisingly, Hims & Hers is getting sued for this practice, which is a fast-growing part of its business. Investors are worried about the future impacts of this legal battle and how it could hurt Hims & Hers' future revenue growth and profitability.
Image source: Getty Images.
Should you buy Hims & Hers stock?
Hims & Hers has been an incredible stock to own over the last few years, making shareholders rich. It has $2 billion in trailing revenue, up over 1,000% in the last five years. By far, it is the leading telehealth provider for drugs and medical treatments over the internet, making a ton of inroads in market share gains in the last few years.
If there were no legal battle looming, Hims & Hers would probably be a buy on this dip. However, we cannot ignore the potential legal ramifications and huge risk Hims & Hers management is putting on itself and shareholders by blatantly selling patented weight loss drugs on its website. This legal battle is not likely to end well. Don't buy the dip on Hims & Hers stock until its dispute with the weight loss drugmakers is resolved.
