Why Giftify’s Next in Line for the GLP-1 Gravy Train

With GLP-1 shortages now resolved and Hims & Hers [NYSE: HIMS] down in the dumps, you might be tempted to think the GLP-1 gravy train is over. But not so fast.

Just last week, Giftify Inc. [NASDAQ: GIFT] burst onto the scene with its “smart savings solution for popular GLP-1 weight loss medications.” And with it, they’ve just stuck a very large finger in the GLP-1 pie.

What’s more, unlike the short-term play we saw from Hims & Hers, Giftify’s play is a viable, long-term strategy that’s ticking all the boxes. In short, they’re not leaning on arcane FDA workarounds. Instead, they’re giving consumers direct, discounted access to genuine brand-name GLP-1 medications like Ozempic and Wegovy.

That’s set Giftify up to soar. Especially now that HIMS is collapsing.

Is Giftify’s Discounted Ozempic Play Too Good to Be True?

At first glance, Giftify’s [NASDAQ: GIFT] promise might seem a little too good to be true. At least, that was my first reaction on reading the news. However, with an understanding of Giftify’s business model in place, the promise starts to make a lot of sense.

For background, Giftify is the company behind popular discounted gift card marketplace CardCash.com, a platform that allows consumers to ‘cash in’ their unwanted gift cards, which CardCash.com then sells at a discount. The company also offers enterprise integrations, with its recently announced CVS partnership being a perfect example. In this case, consumers can exchange gift cards from any company for CVS store credit.

With that background in place, Giftify’s [NASDAQ: GIFT] Ozempic strategy should start to become clear. Simply stated, consumers buy discounted CVS or Walgreens gift cards on CardCash.com, and use those to pay for Ozempic.

However, the Giftify Ozempic strategy doesn’t stop there. While it was the press release announcing the campaign that first got my attention here, CardCash.com has already been busy with consumer-facing communications. For example, it recently published a viral blog post about “hacking the system to save on Ozempic”. That post included alternative strategies consumers can use in combination with discounted gift cards to “stack” their savings.

What’s significant about this is the amount of consumer goodwill it produces in addition to drawing attention to the CardCash.com “hack”. For example, the platform is helping consumers access programs like Novo Nordisk’s [NYSE: NVO] savings cards, along with providing price comparisons between different providers, among other things.

Combined, this is helping to position CardCash.com as a genuine ‘top of mind’ player among consumers when it comes to avenues for obtaining discounted Ozempic. And while it’s still early days, the strategy will pay huge dividends over the long term.

In Case You Missed it, Here’s Why Hims & Hers Is Crashing

There’s no arguing that Hims & Hers Health [NYSE: HIMS] saw runway success by cashing in on the Ozempic boom. But that success is pretty much over. How so?

To cut a long story short, Hims & Hers was 100% reliant on an obscure Food, Drug, and Cosmetic Act (FDCA) provision. That provision allowed them to sell generic alternatives to these otherwise patented drugs. But, that came with a number of conditions — the most important was the requirement for the FDA to recognize a shortage of said drug.

And so the story goes — with the runaway success of GLP-1, the pharmaceutical companies holding the patents struggled to keep up with demand. Thus their addition to the FDA Drug Shortages list. For instance, Novo Nordisk’s [NYSE: NVO] patented GLP-1 medication, Semaglutide (the active ingredient in Ozempic and Wegovy) was, until last week, marked as in shortage by the FDA.

But now the FDA has removed Semaglutide from its shortages list, that loophole’s over. That’s why Hims & Hers has seen its stock price wiped out in a matter of days. No more loophole means an end to the easy ride on the GLP-1 gravy train.

Of course, none of this affects Giftify’s [NASDAQ: GIFT] recent entrance onto the Ozempic wave. Simply put, its play doesn’t rely on obscure legal loopholes to deliver consumers discounted access to GLP-1 weight loss medications. Instead, they’re bringing consumers genuine, name-brand GLP-1 meds at a discounted price.

Why Hims & Hers Collapse == Giftify Boom

At this point, it is highly unlikely that Semaglutide will be making an extended comeback onto the FDA Drug Shortages list. So don’t expect the FDCA loophole Hims & Hers Health [NYSE: HIMS] was relying on to make a comeback. That business model has collapsed.

For Giftify [NASDAQ: GIFT], however, this has created a moment that will deliver a major upside for its business. With Hims & Hers out of the game, more price-conscious consumers will now find themselves with no other alternatives than the patented, big-brand names. Demand for Giftify’s smart savings solutions program will therefore spike. Big time.

As for how big of an effect this will have, we’re still in the first few days of the Giftify campaign. That makes it hard to gauge at this stage. Much will come down to the efficacy of its marketing push, and its ability to raise consumer awareness. Although, given the massive appeal of its smart savings program, I also wouldn’t be surprised if word of mouth eventually took over, even with minimal marketing activity by Giftify.

Translating this into tangible shareholder value is, however, another ‘up in the air’ question. Although, one thing is reasonably certain — whatever effect Giftify’s Ozempic/Wegovy play has will likely act as something of a multiplier effect on its stock price, given that Giftify is arguably significantly undervalued at this moment. Simply put, the resulting additional shareholder attention should result in a strong upward correction.

How Strong Will the Giftify Valuation Be?

Fortunately, judging the upside here is a simpler question to answer. For that, we need only look at the fair market valuations of similar companies, which tend to fetch anywhere from a 3x to 8x revenue multiple. We saw an example of one such valuation in Vivid Seat’s [NASDAQ: SEAT] recent Vegas.com acquisition in a deal worth 5x Vegas.com’s annual revenue at the time.

If, at first, this seems like an unusual comparison to make, it’s worth noting that the two businesses are more similar than is immediately apparent. While both do address different markets — one sells Vegas experiences, the other gift cards — the fundamental market they address, and their mode of addressing it, remains the same. Each acts as an intermediary in the buying and selling of discounted ‘goods’, and each does so via its own online platform.

Of course, this doesn’t mean we can directly translate the Vegas.com valuation into a Giftify valuation. That would be the equivalent of saying that we should value all SaaS companies the same, which we all know isn’t quite how things work. However, we can confidently apply a valuation range — in much the same way that SaaS companies typically fetch a 10x to 15x revenue multiple, businesses like Giftify typically fetch between 3x to 8x.

Taking that range and applying it to Giftify’s [NASDAQ: GIFT] TTM revenues of $85.95 million, we arrive at a valuation range of between $258 million, or $9.60 a share at the low end, and $688 million, or close to $25.60 a share at the high end. Given that it’s currently trading at around the $1.40 a share mark, that makes Giftify [NASDAQ: GIFT] a hard act to beat on the strength of its current business alone. Any additional revenue it generates off the back of its Ozempic play will only increase the upside.

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(Featured image by Chemist4U (CC BY-SA 2.0) via Flickr)

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