Hims & Hers: Insider Selling Sparks Debate, But Telehealth Potential Justifies a Buy

The recent wave of insider selling at Hims & Hers Health (NYSE:HIMS) has ignited speculation about whether executives are cashing out ahead of potential downside. Over the past six months, CEO Andrew Dudum and Chief Legal Officer Soleil Boughton have sold millions of dollars worth of shares through prearranged trading plans. Meanwhile, the stock has surged to $59.17 as of June 17, 2025, driven by rising telehealth demand and institutional buying. This creates a paradox: Is the selling a red flag, or an opportunity to buy a growth stock at a relative discount?

The Insider Selling Context: Plans vs. Perceptions

Between April and June 2025, Dudum sold 308,291 shares totaling over $22.1 million, while Boughton unloaded 391,031 shares since late 2024. Both transactions were executed via 10b5-1 trading plans, which are pre-scheduled to avoid allegations of insider trading. This distinction is critical: such plans are often used by executives to systematically sell shares without relying on real-time market insights.

However, the timing raises eyebrows. The sales occurred alongside a $1.0 billion convertible note offering priced at $70.67—a 12% premium to the stock's June 17 closing price of $59.17. Analysts question whether insiders are hedging against valuation risks, especially given the stock's P/E ratio of 139, nearly eight times the industry median.

Fundamentals and Institutional Momentum: A Contrarian Signal?

Despite the insider activity, institutional investors have been net buyers. Funds like Strs Ohio and Kilter Group LLC increased stakes in Q1 2025, bringing institutional ownership to 63.52%. This suggests confidence in Hims & Hers' telehealth expansion, a sector projected to grow at 14% annually through 2030. The company's $0.5 price-to-sales ratio—below peers like Teladoc and Oscar Health—supports the argument that the stock remains undervalued relative to growth potential.

The convertible note offering also merits scrutiny. While the $70.67 conversion price may seem high, it could reflect management's belief in long-term value creation. The funds raised will likely fuel product diversification (e.g., new prescription drug partnerships) and market penetration, key advantages in a fragmented wellness space.

Technical Analysis: A Bullish Turnaround?

Technically, the stock has broken above critical resistance. The 50-day moving average ($45.77) and 200-day moving average ($38.46) are now acting as support levels, with the stock trading 30% above both. This upward momentum, paired with rising volume during recent rallies, indicates growing institutional interest.

Valuation Debate: Overpriced or Undervalued?

Critics argue the high P/E ratio signals overvaluation, but this metric overlooks Hims & Hers' non-linear growth trajectory. The company's telehealth platform, which connects users to licensed providers for personalized care, is scaling rapidly. With 60% of U.S. adults now using telehealth services post-pandemic, the demand for Hims & Hers' integrated wellness ecosystem is structural.

The price-to-GF-Value ratio of 2.17, while elevated, is tempered by the company's 139% year-over-year revenue growth (per 2024 filings). This suggests investors are paying a premium for growth that could justify current multiples in the next 2-3 years.

The Investment Case: Buy the Dip, but Mind the Volatility

For long-term investors, Hims & Hers offers compelling upside. Its $13.24 billion market cap reflects a fraction of its addressable market ($200+ billion in U.S. telehealth alone). The stock's low P/S ratio and strong institutional inflows suggest it's undervalued relative to peers.

However, short-term volatility remains a risk. The disconnect between insider selling and the convertible note's pricing creates uncertainty. Investors should:
- Watch the $55 support level: A breach could trigger further selling.
- Monitor telehealth adoption metrics: Quarterly revenue growth and user retention will validate the thesis.
- Consider dollar-cost averaging: Avoid large positions in a single trade; instead, build exposure over time.

Conclusion: A Growth Stock Worth the Ride

While insider selling is a valid concern, it's overshadowed by Hims & Hers' strategic positioning in a high-growth sector. The stock's technical and valuation metrics align with a company primed to capitalize on secular trends. Buyers should focus on the long game, using dips below $50 as entry points. As the telehealth market matures, Hims & Hers' integrated platform could become a category leader—justifying a Hold-to-Buy rating for patient investors.

Final Note: The stock's current price of $59.17 is 30% below the convertible note's $70.67 conversion price, creating an implicit floor. This asymmetry rewards investors willing to ride near-term volatility for long-term gains.