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$Oscar Health, Inc.(OSCR)$ $Hims & Hers Health Inc.(HIMS)$ $DLocal Limited(DLO)$ 📉⚖️💥 Oscar Health’s Asymmetric Set-Up: Regulatory Noise, Structural Strength, and 20x Valuation Math 💥⚖️📉

$OSCR has plunged -30% this week after a downgrade from Wells Fargo, yet the broader investment thesis remains sharply asymmetric. I’m tracking this closely, not because I hold a large position, but because the dislocation between price and intrinsic value is now so extreme, it demands deeper scrutiny.

Let’s walk through the structural, fundamental, and technical case for Oscar Health as a generational re-rating opportunity mispriced by political fear.

🧬 Structural Tailwinds and Subscriber Growth Surge

Oscar Health has proven itself operationally over the past 2 years, unlocking exponential user growth through strategic platform efficiency. It took 11 years to reach 1 million members. Then it added another million in just 15 months.

That acceleration is no accident. Oscar’s operating model borrows from the $COST playbook, prioritising scale, automation, and seamless digital workflows to deliver insurance that doesn’t feel like medieval torture. This focus has translated into lower costs for users and better margins for the business. CEO Mark Bertolini and CTO Mario Schlosser have consistently stressed this model in earnings calls, and the data supports it.

In 2022, Oscar offered the lowest-cost plan in only 5% of markets. By 2025, its footprint, user experience, and pricing strength have scaled materially. That’s how you shift power in a commodified industry.

💹 Valuation: 20x Potential Hiding in Plain Sight

Oscar is now trading at just 0.36x sales. That’s below liquidation territory for a profitable tech-enabled platform. Yet this is a company growing revenue at over 50% YoY and reducing both SG&A and medical loss ratios, two key operating benchmarks for insurers.

If the political cloud around ACA subsidies clears, a multiple re-rate to even 4x sales would imply a 10x move. Reversion to peer group valuations (8x–10x P/S) puts a 20x upside squarely on the table.

Even Wells Fargo’s $10 bear case assumes a worst-case non-renewal of ACA subsidies, an outcome that would directly harm Republican voters in red states, who account for 64% of Oscar’s membership base. Politically, that’s a high-risk, low-reward scenario for the GOP heading into an election cycle.

📊 Fundamentals Still Building Under the Surface

In Q1 2025, Oscar posted its lowest ever SG&A and MLR (Medical Loss Ratio) despite the rapid expansion in membership. That kind of margin discipline during scale-up is exceedingly rare. It suggests the platform is not just adding users, but doing so efficiently.

Operational cash flow has surged, confirming that Oscar isn’t just growing on paper. The dollars are showing up. Yes, some of that OCF boost is likely cyclical, but it signals real product-market fit.

This is not $LFMD or a speculative hope-and-dream SPAC. Oscar has product traction and platform leverage.

💥 Technical Breakdown or Setup for a Bounce?

Friday’s rejection from monthly resistance at $21.55 triggered a steep reversal to $14.37 (-7.47%) as of 11Jul25. This pulled $OSCR back toward the monthly Kijun line (~$13) and the 0.618 Fibonacci level around $12.25, which now serves as critical support.

This pattern resembles a classic “cup and handle” formation, where the current drop is the ‘handle’ forming before a potential breakout. The structure remains intact unless the price decisively breaks down below $11.20, the 52-week low.

On the weekly, the Bollinger Bands are expanding, suggesting volatility will remain elevated. The 5, 10, 20, and 30-day moving averages are now converging in the $14.70–$15.00 zone. A close above this range would flip momentum bullish again and set sights back toward $19.92 (0.786 retracement) and $23.79 (52-week high).

🧠 Options Data Shows Institutional Hedging, Not Capitulation

Despite the stock’s fall, option flow isn’t signalling panic. Yes, put volume surged to a 1.79 put/call ratio with IV30 at 116.32, but that reflects protection, not outright bearish bets.

The flattened skew actually suggests positioning is moderating. In short: funds are buying downside insurance, not shorting the business. That matches with the Wells downgrade being more about regulatory concern than company failure.

🏛️ ACA and Political Risk: Mispriced or Misunderstood?

Let’s address the elephant in the room: ACA subsidies.

Congress is set to re-evaluate the ACA premium tax credits in 2025. If not renewed, insurance costs would rise, disproportionately affecting lower-income enrollees, particularly in Republican-controlled states, where 64% of Oscar’s users reside.

Would Republicans risk triggering millions of angry voters in swing states by making healthcare unaffordable during an election cycle?

Unlikely.

Even if some subsidies were rolled back, Oscar is already moving into the ICHRA (Individual Coverage HRA) market, which allows employers to reimburse workers tax-free for individual premiums. This segment is projected to explode as gig economy platforms like $UBER add more contract workers under this model. Oscar had 3,700 ICHRA members in Q3 2023, and expansion in this space could reduce dependency on ACA altogether.

📚 Analyst Views: Divergence Creates Opportunity

Wells Fargo’s downgrade was sharp, cutting PT from $16 to $10 and assigning an Underweight. But the average analyst target across the Street still sits at $17.56. Several still hold ‘Buy’ or ‘Hold’ ratings, indicating a split view.

This divergence creates opportunity for informed contrarians. I’m not currently long $OSCR, but this is the kind of setup I mark up for asymmetric exposure.

🔍 What to Watch

1. Support test at $12.25 (monthly Fib and Kijun)

2. Political developments around ACA subsidy renewals

3. New ICHRA user metrics in next quarterly filing

4. Bounce signal on weekly MACD or reversal candle above $15.00

5. Changes in institutional positioning from 13F or options data

🔎 Contrarian Insight: Bearish Flow ≠ Bearish Thesis

The recent option activity looks bearish on the surface, but strip out Wells Fargo’s shock downgrade and what remains is defensive hedging amid political noise. Beneath that, the business fundamentals and cash flows are quietly strengthening.

Oscar is one of few companies that can claim both operational excellence and an unappreciated macro hedge. If Republicans blink and renew subsidies, valuation multiples won’t just normalise, they’ll overshoot.

📈 Conclusion: A Volatile Path to Long-Term Reward

Oscar Health is in the eye of a political storm, yet structurally, it’s one of the best-positioned players in the individual healthcare market. The current pullback is not a thesis-breaker; it’s a volatility compression event tied to macro fears.

While regulatory risks are real, the market is overpricing them.

I see Oscar as a classic asymmetric opportunity: minimal downside from current levels if politics behave rationally, and exponential upside if investors recalibrate around platform efficiency and subscriber economics. Fair value lies somewhere between 4x and 10x sales. Today it trades at 0.36x.

I’m watching for a reversal above $15.00 and may add if that confirms. For now, this remains high on my radar.

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