Is Hims & Hers Health's Recent Short Interest Drop a Sign of Investor Optimism?

Short Interest Trends and Market Sentiment

Short interest serves as a barometer of bearish sentiment, but its decline can also indicate short covering or a shift in market dynamics. HIMS' short interest ratio (days to cover) stands at 3.3, meaning it would take 3.3 days of average trading volume (30.92 million shares) to cover all short positions according to MarketBeat data. This ratio has remained relatively stable despite the slight drop in shorted shares, suggesting that while short sellers are reducing their exposure, they remain cautious.

Historically, HIMS' short interest has fluctuated significantly. For instance, in March 2023, it was 17.31 million shares, with a days-to-cover ratio of 3.87 according to Fintel data. By late 2025, the short interest had surged to over 67 million shares, reflecting growing skepticism about the company's business model, particularly its reliance on compounded GLP-1 drugs. The recent 0.33% decline, however, hints at a potential inflection point.

Peer Comparisons and Valuation Dynamics

HIMS' valuation metrics remain less attractive compared to peers. Teladoc Health and Amwell, for example, trade at forward 12-month price-to-sales (P/S) ratios of 0.6X and 0.5X, respectively, while HIMS' P/S ratio is 2.9X according to Drug Patent Watch analysis. This premium reflects both the company's ambitious growth strategy and lingering regulatory risks. However, HIMS' expansion into diagnostics (via the acquisition of YourBio Health) and international markets (Canada, Europe, and beyond) could justify its higher valuation if executed successfully according to HIMS investor announcements.

Regulatory and Partnership Developments

Regulatory challenges have been a persistent headwind. The termination of HIMS' partnership with Novo Nordisk in June 2025-due to disputes over compounded semaglutide- triggered a 35% drop in its share price. Yet, recent developments suggest a thawing of relations. In late 2025, HIMS announced renewed talks with Novo Nordisk to reintroduce Wegovy to its platform according to The Pharma Letter reporting, a move that could restore credibility and expand its market access.

Additionally, HIMS' acquisition of YourBio Health-a pioneer in pain-free blood sampling technology-is expected to close in early 2026, pending regulatory approvals. This acquisition aligns with the company's push into wellness and diagnostics, potentially differentiating it from competitors.

Analyst Price Targets and Investor Sentiment

Analyst sentiment has turned cautiously optimistic. As of late 2025, price targets for HIMS range from $30 to $85, with an average of $45.50, implying a 23.65% upside from its current price. Notably, Leerink Partners upgraded its rating to "Strong-Buy" in December 2025 according to Yahoo Finance data, while Barclays set a $48 target according to TipRanks forecasts. These upgrades, coupled with HIMS' international expansion and product diversification, suggest that analysts are factoring in long-term growth potential.

Short Covering Opportunities and Risks

The decline in short interest could signal short covering, particularly if HIMS continues to outperform expectations. For instance, its Canadian market entry in early 2026-coinciding with the global launch of generic semaglutide- has already driven a 3.6% stock rally. However, risks remain. Pricing pressures in the GLP-1 space and regulatory scrutiny of compounded drugs could reignite bearish sentiment. Moreover, HIMS' short interest still represents a significant portion of its float, leaving room for volatility.

Conclusion

While the recent drop in HIMS' short interest is modest, it aligns with broader signs of improving investor sentiment. Strategic moves like the YourBio acquisition, international expansion, and renewed Novo Nordisk talks address key weaknesses in the company's business model. Analyst upgrades and bullish price targets further reinforce the case for optimism. However, investors should remain cautious, as regulatory and competitive risks persist. For now, the decline in short interest appears to reflect a tentative shift in sentiment rather than a definitive turning point.