What happened

Shares of Teladoc Health (TDOC -0.07%) were losing ground Friday after the telehealth specialist announced it had completed its merger with Livongo Health, the health-tech company best known for its diabetes-monitoring platform.  

Investors didn't like the merger when it was first announced in August, selling off shares of both Teladoc and Livongo on the news, so it's not a surprise to see Teladoc shares backtrack again on the completion of the deal. Also today, tech stocks fell sharply after big tech companies including AppleAlphabetFacebook, and Amazon reported earnings last night. Though the numbers were mostly better than expectations, investors still sold off all four except for Alphabet, indicating that there may be a bubble in tech stocks after much of the sector has posted eye-popping returns this year.

Teladoc shares were down 7.3% as of 11:10 a.m. EDT, after losing as much as 9.2% earlier in the session. At the same time, the Nasdaq Composite was down 2.6%.

A mother and a child talk to a doctor on an iPad.

Image source: Teladoc.

So what

The deal to buy Livongo was nearly all stock. Livongo shareholders received 0.592 shares of Teladoc plus $11.33 in cash for every share of Livongo they owned. Based on those terms, it's hard to argue that Teladoc overpaid for Livongo since it used its own stock, but the deal, which came after both stocks had surged in the previous month, seemed indicative of a bubble in high-flying tech stocks.

In the announcement this morning, Teladoc touted the combination of "the market leaders in virtual care and applied health signals," and Teladoc CEO Jason Gorevic said: "Both Teladoc Health and Livongo were founded with the same mission: to create a new kind of healthcare experience, one that empowers people everywhere to live their healthiest life. Today's news dramatically accelerates our ability to make this a reality for the tens of millions of consumers and healthcare professionals we serve around the world."

Teladoc reported strong third-quarter results earlier this week, including a 109% jump in revenue to $288.8 million.

Now what

Investors seemed to be warming to the merger earlier this month when the healthcare stock rose after the company announced the first major sale for the combined company, signing up Guidewell Health as a new customer. Though there are clear synergies within the now-combined company and a number of justifications for the deal, Teladoc's valuation remains a question mark, especially given the response to big tech earnings.