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Why Teladoc Health Rose on Friday While the Market Slipped

By Eric Volkman – Sep 18, 2020 at 6:36PM

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The move seems to be related to developments with a new kid on the company's block.

What happened

Teladoc Health (TDOC 3.17%), the most high-profile stock in the rapidly emerging telehealth segment, closed almost 3.1% higher on Friday. There was no news of any note from the company that day; rather, its stock seems to be piggybacking on the successful debut of a peer telemedicine services provider.

So what

That peer is Amwell (AMWL 3.56%), which made an auspicious debut in its first day of trading on Thursday and basically held its value the next day. Beset by intense demand, the new stock closed the day 28% higher than its initial public offering (IPO) price of $18. That price, meanwhile, was raised from Amwell's original $14 to $16 range.

A man conferring with a doctor over a laptop.

Image source: Getty Images.

Telemedicine as a segment is hot within the healthcare sector now. It's no mystery why -- the coronavirus pandemic has made people hesitant to leave their homes. Doctor's office waiting rooms, in which numerous people are frequently crowded together in a small space, are environments many are eager to avoid.

Meanwhile, the ever-relentless march of technology has improved to the point where anyone with even a basic smartphone, tablet, or PC can access telemedicine services. 

Now what

Patients are discovering the advantages of remote medicine, so telehealth services providers should continue to thrive even after the pandemic (hopefully) fades away. Investors are justifiably excited about the prospects of the Amwells and Teladocs of the world, and admire their historical and potential revenue growth -- even if profitability is elusive for now.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Teladoc Health. The Motley Fool has a disclosure policy.

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