Hims & Hers Health Inc. (NYSE: HIMS) saw its stock price tumble 5.02% in pre-market trading on Friday, following the announcement of a significantly upsized convertible senior notes offering. The telehealth company priced $870 million aggregate principal amount of 0.00% convertible senior notes due 2030, a substantial increase from the initially proposed $450 million.

The convertible notes, which bear no interest, have an initial conversion price of $70.67, representing a 37.5% premium to the stock's last closing price. Hims & Hers plans to use the net proceeds to accelerate its global expansion through organic growth and potential acquisitions, as well as to enhance the utilization of AI in healthcare. Additionally, approximately $42 million will be allocated to pay for capped call transactions to offset potential share dilution.

While the 0% interest rate is favorable for the company, the significant increase in the offering size appears to have sparked investor concerns about future share dilution. This reaction comes despite the company's recent momentum, including a 23% stock jump on April 29 following news that Novo Nordisk would sell its popular weight-loss drug Wegovy through telehealth firms. The pre-market decline suggests that investors are reassessing the stock's valuation in light of the potential dilutive effect of the convertible notes offering.