Tough to use a P/S ratio to justify HIMS vs CELH or ELF - obviously in hindsight 30 was actually extremely cheap for the growth CELH has had since 2021. On the other hand, it’s tough for a niche health platform with no switching costs to keep its customers. HIMS is spending 50% of its revenue each year on marketing expenses - it’s worked so far, but how many more customers can they reach? And do they have to keep that marketing spend to keep existing customers? (reminder that often times marketing expenses reflect discounts on products and not just expenses to attract new customers) There are only so many potential users for its target market.
Further, it’s tough to have to compete on price. There are so many ways nowadays to get your hands on ED/hair loss drugs - without brand recognition it will be tough for HIMS to raise prices and their margins.
Consumer brands like celsius or elf have completely different psychological effects on its customers imo, and the total market is magnitudes bigger than HIMS. To me the current valuation reflects the market belief that both the terminal growth rate opportunity for HIMS is low and the opportunity for margin expansion is limited. Of course, the market could always be wrong, and if HIMS is able to accelerate back above 50% and get further operating leverage, it can turn into a real winner.
This just simply isn’t true - the issue was raised again and again from the first moments saul put it in his portfolio and was hand waved away. One of the reasons he (and Bear) mentions not to strictly follow his actions. jonwayne even laid out what could happen in his post (I mention an example here as well)