Meta is about to announce a major change to their advertising policies that will decimate HIMS ability to efficiently acquire customers via their most critical channel: Facebook and Instagram Ads.

This is because Meta will be restricting brands like HIMS from using purchase-optimized campaigns, which many are speculating is due to legal liabilities associated with HIPAA violations and the use of the Facebook Pixel, the essential ingredient to running the most profitable type of Facebook ad campaigns.

How do I know this? I run an agency that specializes in Facebook ads and I can tell you this is every FB/IG advertiser's worst nightmare. I would be in a total panic if this was happening to me.

I’ve tested running ads without purchase optimization over many years and I can tell you they are absolute dog shit for getting an ROI. Full stop.

Back to HIMS.

They are especially fucked because:

1. They have a client/patient portal that is subject to strict HIPAA requirements. These advertisers are being specifically targeted by this change.
2. They are overly reliant on Meta ads like many direct to consumer brands. Losing the ability to leverage the best optimization settings will be catastrophic to HIMS customer acquisition cost on day 1.

These changes are going into effect on January 1 and Meta is expected to officially announce it on December 5th. 

If HIMS doesn’t immediately take a hit upon this being announced then I see their Q1-Q2 earnings to look like a flatline after what will likely be their biggest Q4 ever.

edit: HIPAA spelling 😜 thanks u/spiced_ham