During the COVID-19 outbreak, telehealth companies like Teladoc saw a huge increase in usage. The conditions brought on by the pandemic ultimately catalyzed Teladoc’s rising stock price.
However, as the restrictions tapered off, Teladoc stock slid. What does this mean for Teladoc moving forward, and will Teladoc stock ever be able to recover from this continued downtrend?
The History of the Teladoc Company
In 2002, Teladoc Health, Inc. (TDOC) was founded by Byron Brooks and Michael Gorton in Dallas, Texas. The Teladoc company was created with the goal of transforming the healthcare industry by empowering all people to take their healthcare experience into their own hands.
In the early 2000s, the Internet was relatively new, so the concept of patients remotely consulting with licensed doctors through video calls was truly revolutionary.
While many were skeptical of Teladoc’s virtual healthcare company, the company ultimately received enough support to expand nationwide by 2005.
Now, two decades later, Teladoc Health is continuing to disrupt the traditional healthcare experience by allowing individuals around the world to receive whole-person virtual healthcare that includes primary care, mental health services, chronic condition management, and more.
Why Did Teladoc Stock Rise and Fall?
Teladoc (NASDAQ: TDOC) went public on the New York Stock Exchange in July 2015. Teladoc stock’s initial public offering was $19 per share. By the end of January 2020, just under five years after going public, Teladoc stock was trading at around $100 per share.
While COVID-19 heavily impacted the stock market as a whole beginning in March 2020, Teladoc shares was relatively unaffected. In fact, unlike other stocks that plummeted in price during this time, Teladoc held firm and even saw an increase in the price per share in the months following.
Essentially, Teladoc stock saw a rise in stock price throughout the early month of the pandemic because its business model of providing virtual healthcare was greatly needed during this time.
As a result, Teladoc stock hit an all-time high of just over $300 per share in February 2021. However, while the pandemic resulted in a rise in Teladoc stock, as of late, the company’s stock has seen a steady decline. According to Forbes, the stock price of Teladoc has fallen over 20% in the last month and is down more than 70% over the last year.
As of February 2022, Teladoc stock is sitting around $70 per share. Ultimately, the fall of Teladoc stock can be attributed to the decline in COVID-19 protocols and the ability to become vaccinated against the virus. The omicron variant has also proven to be less severe in nature, empowering many individuals to venture out of their homes and back to their local doctors rather than seeing virtual healthcare providers through Teladoc Health.
What Are Major Investors Saying About Teladoc?
While the steady fall in Teladoc stock has many investors on the fence about its future, others still see Teladoc as a winning investment.
One prominent Teladoc supporter is the ARK Invest founder and CEO Cathie Wood. According to Forbes, Wood is a star stock-picker and founder of ARK Invest, which currently holds over $60 billion in assets.
In December 2021, Cathie Wood’s ARK Invest sold $4 million worth of Tesla shares and used these funds to buy $3 million worth of Teladoc shares. While Wood’s decision has been met with some pushback, she remains firm in her support of Teladoc.
ARK’s Innovation ETF returned around 150% last year. Only time will tell if Wood’s decision to invest in Teladoc proves financially beneficial. While Wood’s portfolio has taken a beating in recent months, she remains confident that ARK’s funds will quadruple in the next five years.
The Teladoc Model Is Disruptive
Despite the stock’s steady decline over the past year, Teladoc Health still holds a promising future due to its disruptive model. According to Tulane University School of Public Health and Tropical Medicine, Telemedicine is here to stay for the foreseeable future.
However, telehealth providers like Teladoc will need to evolve and address present limitations in order to thrive in the future. Telemedicine can prove to be useful even without a global pandemic. From individuals living in rural communities to those not wanting to risk exposure while sick to elderly patients that find it difficult to get around, telemedicine is a useful alternative to traditional doctor visits.
Receiving mental health counseling through video calls is also becoming more popular, giving another reason why Teladoc Health and other telemedicine companies will prove to be integral in managing all aspects of a patient’s health both now and in the future.
Ultimately, Teladoc Health’s model is continually disrupting the healthcare industry and has been since 2005. If Teladoc can evolve with the changing demands of telemedicine, then the company has a long and promising future ahead of itself.
Is Teladoc Stock Undervalued Now?
Teladoc Health, Inc. has a market cap of $11.65 Billion, making it the world’s 1,400th most valuable company.
The company does have a promising future in terms of the growing need and adoption of telemedicine. Teladoc is also aiming to reach $2.6 Billion in annual revenue next year, and the company is striving to reach $4 billion in revenue by 2024.
In addition, Teladoc is also signing more and more individuals for multiple health care programs within the company.
Teladoc reports that 24% of its chronic care members are now enrolled in more than one program, which is up 8% from the last year.
With all things considered, if Teladoc can hit the revenue numbers they intend to while also increasing the numbers of members they have enrolled, then Teladoc proves to be an undervalued stock right now as it sits around $70 per share.
At its current price per share, Teladoc is sitting around where it was pre-COVID.
Based on a discounted cash flow forecast analysis, Teladoc has upside to $134 per share.
Is Teladoc Stock a Buy or Sell Now?
While Teladoc stock has been on a steady decline over the past year, the company’s revenue growth is increasing. In the third quarter of 2021, the company reported year-over-year revenue growth of 81%.
Of course, Teladoc’s continued revenue growth places it in a favorable position moving forward. The telehealth industry is also expected to reach a market size of $637 Billion by 2028, which should help to continue Teladoc’s revenue growth in upcoming years.
Based on the expected growth of the Telehealth industry, Teladoc’s continual revenue growth, and its current stock price of around $70 per share, Teladoc stock is looking like a great buy right now and throughout 2022. However, for investors still unsure about the stock longevity, waiting on the results of the next few quarters might be best before making an investment in Teladoc.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.