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📈 Hims & Hers Margin Squeeze
Apple boosts U.S. investment with $500B pledge, Chegg sues Google, Palantir loses 20% in a week, JPMorgan has $50B more for lending, Hims & Hers shares plunge
Evelio Silvera
February 25, 2025
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Good morning.
⚡ The Fast Five → Apple boosts U.S. investment with $500B pledge, Chegg sues Google, Palantir loses 20% in a week, JPMorgan has $50B more for lending, Hims & Hers shares plunge
🔎 Market Trends → Fed needs more clarity before it can go back to cutting rates, says Goolsbee; US Futures Hold Steady Following Tech Selloff
And now…
⏱️ Your 5-minute briefing for Tuesday, February 25, 2025:
MARKET BRIEF
Before the Open
As of market close 02/24/2025.
Pre-Market
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Fear & Greed
Markets in Review
Markets Slip as Tariff Concerns Weigh on Tech
The Nasdaq fell 1.2% to 19,286.9, while the S&P 500 lost 0.5% to 5,983.3. The Dow edged 0.1% higher to 43,461.2, buoyed by health care stocks as technology shares led the decline.
The Big Picture:
Markets remain locked in a tariff tug-of-war. President Trump reaffirmed plans to impose tariffs on Canada and Mexico in March, unsettling investors who had hoped for a delay. The uncertainty is already hitting US manufacturers, with the Dallas Fed reporting a steeper-than-expected drop in Texas factory activity this month.
At the same time, the Federal Reserve's rate outlook remains in focus. Treasury yields fell, with the 10-year down 1.8 basis points to 4.40% and the 2-year slipping 1.5 basis points to 4.18%, signaling investor caution.
Oil and gold held firm, with WTI crude up 0.6% to $70.85 a barrel and gold rising 0.5% to $2,966.90 per troy ounce, as traders sought safe-haven assets.
Market Movers:
Nvidia (NVDA) fell 3.1% ahead of earnings this week, as investors took profits after its blistering AI-fueled rally.
Palantir (PLTR) tumbled 10.5%, as concerns over potential government spending cuts weighed on its lucrative defense contracts.
Robinhood (HOOD) slid 3.2%, despite announcing that the SEC dropped its investigation into its crypto business, a potential sign of regulatory easing in digital assets.
Starbucks (SBUX) rose 1.3% after announcing a 1,100-job reduction as part of its "Back to Starbucks" turnaround plan.
Bridge Investment Group (BRDG) soared 34% after Apollo Global (APO) announced a $1.5 billion buyout to take the real estate investment firm private. Apollo shares dipped 1.8%.
What They’re Saying:
"Tariffs are driving the economic conversation right now, as investors grapple with the evolving US policy framework," Morgan Stanley wrote in a note.
WHAT WE’RE WATCHING
Events
Today: The Conference Board Inc. - CB Consumer Confidence - 10:00am
Why You Should Care: Financial confidence is a leading indicator of consumer spending, which accounts for a majority of overall economic activity.
Earnings Reports
Today: Home Depot, Intuit, Keurig Dr Pepper, CAVA, Extra Space Storage, American Tower, Bank of Montreal (BMO), Workday
Tomorrow: NVIDIA, Salesforce, Lowe’s, TJX Companies, Anheuser-Busch InBev, Monster Beverage, Stellantis, eBay
MARKET BRIEF
Leading News
GLP-1 Fallout: Hims & Hers Faces Margin Squeeze Despite Soaring Revenue
Why it matters:
Hims & Hers Health (HIMS) delivered impressive 95% revenue growth, but investors zeroed in on margin pressure and regulatory headwinds in the weight-loss segment that could reshape its business model.
Zoom Out:
The telehealth rising star reported $481 million in quarterly revenue and 11 cents EPS, both exceeding Wall Street expectations. But the stock tumbled 18% in after-hours trading as gross margins fell to 77% — below the 78.4% analysts had penciled in.
This comes just days after HIMS shares already plunged 26% when the FDA announced the end of semaglutide shortages, threatening the company's lucrative compounded weight-loss drug business that generated $225 million in 2024 revenue.
Key Insights:
Regulatory pivot required: The FDA's move will likely force HIMS to discontinue compounded semaglutide offerings after Q1, shifting its weight-loss strategy toward oral medications and generic liraglutide.
Beyond weight-loss: The company's non-GLP-1 products grew 43% to $1.2 billion in annual revenue, suggesting a diversified health platform that reached its 2025 target a year early.
Forward guidance remains robust: Management projects Q1 revenue of $520-540 million, considerably above the $497 million consensus, indicating confidence in their ability to navigate the transition.
Market Pulse:
"The market's reaction resembles a patient who received mostly good news but fixated on the one concerning test result," notes health tech analyst Sarah Johnson. "HIMS still has multiple growth levers beyond GLP-1s."
Bull’s Take:
Smart investors might see this sell-off as a potential entry point for a company successfully democratizing personalized healthcare. The weight-loss segment represents just one piece of a rapidly expanding telehealth ecosystem that continues to outperform broader expectations.
Headlines
Chegg sues Google for hurting traffic with AI as it considers strategic alternatives (link)
Why retail darling Palantir has seen its stock plunge more than 20% in a week (link)
Microsoft reportedly cancels some data center leases amid $80 billion AI push (link)
Anthropic launches advanced AI hybrid reasoning model (link)
Apple boosts U.S. investment plans with $500 billion pledge amid Trump tariff threat (link)
JPMorgan sets aside $50B more for direct lending push (link)
CRYPTO
Fear & Greed
Headlines
DAILY SHARE
On the Socials
*Hat-tip to wallstmemes
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