The recent volatility in key GLP-1 stocks has put the spotlight on the anxiety Wall Street has about the weight loss market. The market is huge — a potential $150 billion a year by the end of the decade — and any financial miss, or negative data of any kind, will trigger outsized sell-offs.
This past week, for example, Amgen (AMGN) lost $12 billion in market value. Hims & Hers (HIMS) lost 10% in a single day in October when the FDA ended the shortage designation of Eli Lilly’s (LLY) drugs. (Its worst day on record was Nov. 14, down 24% after Amazon (AMZN) launched a direct prescription service modeled after the company.)
Last month was the most dramatic, when Lilly saw more than $127 billion in stock value wiped out at peak loss in a single day. The company missed analyst estimates on its diabetes and weight-loss drugs, Mounjaro and Zepbound. (Investors bought the Lilly dip and the loss was pared to $54 billion by market close).
The recovery in the stock came only after CEO David Ricks responded to an analyst question on an earnings call about the sales miss, saying that demand was up 25% quarter over quarter. The stock started to pick up right after that, according to Citi healthcare analyst Geoff Meacham.
How volatile is that? The move seen in Lilly’s stock is typically reserved for Magnificent Seven stocks. For example, the day after the election, Tesla’s (TSLA) market cap increased by $120 billion.
The day of Lilly’s loss, another company on its way into the GLP-1 space was grappling with what the sell-off could mean for its future.
Amgen CFO Peter Griffith told Yahoo Finance the company, whose GLP-1 candidate MariTide is still only in mid-stage clinical trials, was worried investors were going to change how they rewarded the company’s stock — from weighing overall performance to focusing on a single product.
“There’s no doubt that MariTide … will eclipse the rest of our news here in the near future,” Griffith said, unaware at the time he would face that exact fate two weeks later.
The company’s stock was hammered Nov. 12 after older MariTide data published by an analyst briefly appeared to highlight a problematic side effect, which was quickly waved off by other analysts and Amgen itself.
The potential for high returns has created an energy around the leading GLP-1 companies — and serves as a cautionary tale for those that will follow.
“There are more eyeballs on Novo and Lilly than any other stock in healthcare, by a mile. That alone is going to read more volatility,” said Mizuho’s healthcare sector expert Jared Holz.
