Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Teladoc Health Are Sinking Today

By Eric Volkman - Updated Mar 3, 2021 at 3:18PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors are shying away from coronavirus stocks, even though a top investor just bought into this one.

What happened

Teladoc Health (TDOC 2.56%) was down by around 5% in midafternoon trading Wednesday. This, despite the news that renowned investor Cathie Wood's ARK Invest had bought a pack of the company's shares for two of its exchange-traded funds (ETFs).

So what

All told, two ARK Invest ETFs, ARK Innovation and ARK Next Generation Internet, together bought just under 200,000 shares of Teladoc Health for their portfolios.

Woman using telemedicine services.

Image source: Getty Images.

Not everything ARK touches turns to gold, however. Teladoc is considered by many to be a coronavirus stock. Since the pandemic seems to be receding (knock wood), some investors are moving on to companies perceived to be better plays for a post-outbreak economic recovery.

Compounding this is the great popularity the fast-growing Teladoc has enjoyed; its stock rose by a vertigo-inducing 139% across 2020, so it's now considered expensive by more than a few investors. Meanwhile, the guidance proffered by the company in its fourth-quarter results published last week indicate it'll more or less only meet analyst revenue projections for 2021. And it's well in the red on the bottom line.

Now what

None of this means that Teladoc is a bad investment. I think Wood's onto something here by buying during a slump: Teladoc has established itself as a go-to solution for remote healthcare. Considering that the U.S. population is getting older and will require more care, this company is in a fine position to benefit handsomely from the trend.

 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Teladoc Health, Inc. Stock Quote
Teladoc Health, Inc.
TDOC
$31.66 (2.56%) $0.79
ARK ETF Trust - ARK Innovation ETF Stock Quote
ARK ETF Trust - ARK Innovation ETF
ARKK
$41.03 (4.64%) $1.82
ARK ETF Trust - ARK Next Generation Internet ETF Stock Quote
ARK ETF Trust - ARK Next Generation Internet ETF
ARKW
$53.03 (4.88%) $2.47

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
322%
 
S&P 500 Returns
116%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.