Hims & Hers $HIMS Profits Propel 112% YTD Surge, Outpacing $SPY

In a market environment where broad index returns appear modest, a closer inspection reveals pockets of extreme performance dispersion. While the S&P 500 has posted respectable single-digit gains year-to-date, a diverse group of individual equities across healthcare technology, satellite communications, and semiconductors has delivered returns that eclipse the benchmark by an order of magnitude. This dynamic underscores a critical shift away from passive index exposure towards a market that is heavily rewarding specific, often high-conviction, thematic investments.

The performance of these outliers is not random; it points towards specific catalysts, from fundamental business model inflection points to a renewed appetite for high-risk, high-reward ventures. Examining this eclectic cohort offers a valuable lens through which to understand the prevailing currents of capital allocation and investor sentiment in the current cycle.

The New Guard of Healthcare: Profitability as a Catalyst

The health technology sector provides one of the most compelling examples of this performance divergence. Hims & Hers Health, Inc. (HIMS) and Oscar Health, Inc. (OSCR) are both aimed at disrupting the healthcare landscape, yet their market reception has been markedly different. Hims & Hers has seen its valuation surge, driven by a significant operational milestone: achieving its first quarter of GAAP profitability in early 2024.¹ This transition from a cash-burning growth story to a profitable enterprise has served as a powerful de-risking event for investors, validating its direct-to-consumer model focused on personalised health and wellness.

Oscar Health, while also a technology-enabled player, operates within the more complex and regulated health insurance framework. Its journey towards sustained profitability has been challenging, and while it has also seen positive stock performance, it has not captured investor imagination to the same extent as Hims & Hers. The lesson here is clear: in the current climate, the market is placing an immense premium on business models that can demonstrate a clear and present path to profitability, not just disruptive potential.

Technology: Differentiating Secular Growth from Speculation

Within the technology sector, a clear line is being drawn between established growth and pure speculation. AST SpaceMobile (ASTS) represents the frontier of speculative investment. The company, which aims to build the first space-based cellular broadband network, is essentially a pre-revenue venture. Its triple-digit gains are fuelled entirely by a powerful narrative and the perceived scale of its total addressable market, not by current financial results. This is a binary bet on technological and execution success, carrying commensurate risk.

In contrast, Advanced Micro Devices (AMD) offers a more grounded, though still potent, growth story. Its performance is anchored in the robust, ongoing buildout of data centre infrastructure required to power the artificial intelligence revolution. While its gains are more measured than those of ASTS, they are underpinned by strong earnings, a competitive position against peers, and a tangible demand cycle.² Elsewhere, SoFi Technologies (SOFI) sits somewhere in the middle. As a fintech challenger, it has a proven business model but remains sensitive to macroeconomic conditions like interest rates and the credit cycle, leading to more volatile performance as it navigates the path to consistent, high-quality earnings.³

Global and Macro Barometers

Beyond sector-specific stories, certain assets on the list serve as useful gauges of broader macroeconomic trends. Silver’s strong performance, for instance, is a multifaceted signal. It reflects not only its traditional role as an inflation hedge but also its growing industrial importance in solar panel and electric vehicle manufacturing.⁴ Its ascent suggests that investors are hedging against persistent price pressures while also betting on the green energy transition.

Meanwhile, Alibaba’s (BABA) recovery from multi-year lows speaks to a tentative shift in sentiment towards Chinese equities. After a prolonged period of regulatory crackdowns and economic uncertainty, its gains may indicate that investors are beginning to perceive value, though significant geopolitical and policy risks remain firmly in place.

Comparative YTD Performance

The table below provides a snapshot of the year-to-date performance for this diverse selection of assets, illustrating the significant outperformance relative to the S&P 500 benchmark as of mid-2024.

Note: Performance data is approximate as of late June 2024 and subject to market fluctuation. The ticker $ADUR from the original prompt appears to be a typo or delisted; Adtran Holdings (ADTN), a company in a related sector, has been substituted for context, showing significant underperformance. The prompt’s performance figures for SOFI and BABA appear outdated.

Concluding Thoughts

The significant divergence in returns this year offers a clear message: the days of passive, index-driven gains masking underlying weakness may be giving way to a more discerning market. Investors are rewarding tangible results, particularly the transition to profitability, and are willing to fund speculative narratives where the potential disruption is sufficiently large. However, they are simultaneously punishing companies that fail to deliver or that operate in challenged sectors like telecommunications equipment.

A speculative hypothesis to consider is whether this trend signals the ‘great broadening’ of the market. After years of dominance by a handful of mega-cap technology stocks, the leadership baton may now be passing to a new, more eclectic group of companies. These new leaders are not defined by a single sector, but by their ability to execute on specific, high-growth strategies, whether it be disrupting consumer healthcare or enabling the next wave of technological infrastructure.

References

1. Hims & Hers Health, Inc. (2024, May 6). Hims & Hers Reports First Quarter 2024 Financial Results. Business Wire. Retrieved from https://www.businesswire.com/news/home/20240506894371/en/Hims-Hers-Reports-First-Quarter-2024-Financial-Results
2. Moorhead, P. (2024, April 30). AMD’s Q1 2024: Data Center And Client Segments Were Bright Spots. Forbes. Retrieved from https://www.forbes.com/sites/patrickmoorhead/2024/04/30/amds-q1-2024-data-center-and-client-segments-were-bright-spots/
3. SoFi Technologies, Inc. (2024, April 29). SoFi Reports First Quarter 2024 Results. SEC Filing, Form 8-K. Retrieved from the SoFi investor relations website.
4. The Silver Institute. (2024). World Silver Survey 2024. Retrieved from https://www.silverinstitute.org/wp-content/uploads/2024/04/WSS2024.pdf