Shares of Teladoc (NYSE:TDOC) were slipping today for the second day in a row as investors continued to rotate out of high-flying tech stocks, especially those that have done well during the coronavirus crisis, and into more beaten-down cyclical plays. As the economic reopening picks up steam, investors expect that laggards will bounce back, and they are selling off stocks that have already hit all-time highs during the crisis.
Though there was no specific news on Teladoc, that shift was enough to push the stock lower as shares were down 8.8% at 11 a.m EDT on Wednesday. At the same time, the Nasdaq was off 2%, while the Dow Jones Industrial Average was up 0.4%, illustrating the broader bifurcation between tech stocks and cyclicals like manufacturing, energy, industrials, and consumer discretionary stocks.
Teladoc has been a standout performer during the crisis, and it's easy to see why. As a leader in telehealth, a platform using videoconferencing for doctor visits, Teladoc was seen as a beneficiary from the crisis, which forced doctors' offices to close and patients to stay home. Additionally, as a health crisis, the pandemic may be leading more consumers to seek medical advice if they believe they have the virus.
As the chart below shows, shares surged through the first two months of the crisis, but more recently the stock has pulled back as investors may believe it was overbought.
It's unclear if the pandemic will bring about the revolution in telemedicine that Teladoc investors are hoping for. And with businesses starting to reopen, Americans may be eager to resume the usual in-person doctor visits.
In the first quarter, Teladoc saw revenue increase 41% to $180.8 million; doctor visits jumped 92% to 2 million. For the full year, the company raised its revenue guidance by $100 million, putting it in a range of $800 million to $825 million, or a 47% increase at the midpoint, indicating that it expects a tailwind from the pandemic. Indeed, management said on the earnings call that it had seen a significant increase in inquiries from new and existing customers because of the pandemic.
There's no doubt that Teladoc is a winner from COVID-19, but the company is still unprofitable, and the stock has run up 150% over the last year. Though the long-term future looks bright, it may be time for the stock to take a breather.