HIMS Leveraged ETF Crashes 70% as Novo Ends Deal
- The unraveling of the Novo-Hims relationship not only erased billions in market value but also served as a stark reminder of the dangers of using leveraged ETFs.
- For most investors, leveraged ETFs are best used in short bursts with clear risk controls.
The Defiance Daily Target 2X Long HIMS ETF (HIMZ), which aims to double the daily returns of the high-growth American telehealth stock Hims & Hers Health Inc. (HIMS), plunged nearly 70% on Monday, underscoring the potentially devastating impact of concentrated bets in volatile names.
The collapse came after Novo Nordisk (NVO) abruptly ended a partnership with Hims & Hers, a deal that had previously fueled investor optimism about the company’s role in expanding access to popular weight-loss medications like Ozempic and Wegovy.
The unraveling of the Novo-Hims relationship not only erased billions in market value but also served as a stark reminder of the dangers of using leveraged ETFs, especially those tied to fast-moving, hype-driven stocks.
This article unpacks how the HIMZ ETF works, why leveraged ETFs can produce the best and worst returns in the market, and who should and shouldn’t use them.
How HIMZ Works: Why Leveraged ETFs Are a Double-Edged Sword
The HIMZ ETF is designed to deliver 2x the daily return of the daily share price movement of HIMS stock. Leveraged ETFs like HIMZ use derivatives, such as swaps and futures, to amplify short-term price moves, allowing traders to maximize gains or, in cases like Monday, suffer extreme losses.
Thus, leveraged ETFs like HIMZ offer investors contrasting pros and cons to understand before buying shares.
Pros of Leveraged ETFs
- Magnified returns in short timeframes
- Useful for tactical traders and hedging strategies
- Easily traded like any other ETF
Cons of Leveraged ETFs
- Extremely high risk, especially during volatile periods
- Not designed for long-term holding, as daily rebalancing causes performance to diverge from the underlying asset over time
- Highly sensitive to single-stock news, especially in concentrated thematic funds like HIMZ
Monday’s drop for HIMZ shows how a single corporate announcement, even from a third party like Novo Nordisk, can unravel a leveraged ETF built on speculative optimism.
The Best and Worst Performers: Leveraged ETFs Dominate Both Lists
Leveraged ETFs often occupy both ends of performance charts, and June 2025 is no exception, according to data from etf.com's Pulse Tool.
HIMZ is now the worst-performing ETF over the past month, with a 60% decline through June 23, made worse by Monday’s collapse.
Defiance Daily Target 2X Long HIMS ETF (HIMZ)—Source: TradingView & etf.com
Meanwhile, the Defiance Daily Target 2X Long ORCL ETF (ORCX), which seeks to deliver 2x leveraged exposure to the daily share price movement of Oracle Corp. (ORCL), is the top-performing ETF, up more than 70% over the same period.
Defiance Daily Target 2X Long ORCL ETF (ORCX)—Source: TradingView & etf.com
This wide dispersion underscores a key feature of leveraged ETFs: They exaggerate market moves, making them rocket ships in rallies and black holes in downturns. That’s why they’re favored by tactical traders who want to make quick directional bets, not by buy-and-hold investors.
HIMZ Crash Highlights the Risk of Leveraged ETFs
The HIMZ crash on Monday illustrates the core risk of using leveraged products tied to single-company narratives. While ETFs like HIMZ can generate huge gains in the right environment, they are highly speculative, short-term tools that can implode just as quickly when sentiment turns.
Key Takeaways
- Leveraged ETFs like HIMZ offer enhanced upside and downside by design.
- They are not suitable for long-term investors or those new to ETF trading.
- Even headline risk, like a canceled partnership, can trigger massive drawdowns.
For most investors, leveraged ETFs are best used in short bursts with clear risk controls. As the HIMZ collapse makes clear, chasing short-term hype through leveraged products can lead to big wins or brutal lessons.
Know your tools before you trade them.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing in ETFs involves risks, and investors should carefully consider their investment objectives and risk tolerance before making any investment decisions.
At the time of publication, Kent Thune did not hold a position in any of the aforementioned securities.
