Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Teladoc Health Stock Fell 16% in February

By Jon Quast - Updated Mar 4, 2021 at 11:01AM

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

Management predicted robust revenue growth for 2021, but guidance for membership increases fell short of heightened hopes.

What happened

Shares of Teladoc Health (TDOC 5.65%) fell 16.2% in February, according to data provided by S&P Global Market Intelligence. During the month, the company dazzled investors with impressive full-year 2020 results. But its guidance fell short of expectations, leading to the majority of the stock's decline.

So what

For full-year 2020, Teladoc's revenue nearly doubled, up 98% to nearly $1.1 billion. Visits were up even more, with a 156% increase over 2019. It certainly was a stellar year, as the pandemic pushed the adoption of the remote healthcare services that the company provides.

A visibly frustrated man is pictured in front of a down stock chart.

Image source: Getty Images.

But Wall Street analysts were divided on guidance from Teladoc's management for 2021. Some looked at future revenue growth as a reason to raise their price targets on Teladoc stock. Management guided for full-year revenue of $1.95 billion to $2 billion, good for 78% to 83% year-over-year growth.

However, other analysts noted that Teladoc's management only expects paid memberships in the U.S. to grow to a range of 52 million to 54 million in 2021. For perspective, Teladoc ended 2020 with 51.8 million paid members in the U.S. -- meager growth to say the least. These analysts actually lowered their price targets for Teladoc, leading to the stock's decline for February.

Now what

I can appreciate Wall Street's desire to see better increases in memberships for Teladoc. But to me, the company's guidance dispels a widely held misconception with Teladoc. Many believed that it benefited from the pandemic in 2020 but would give back some of its gains. But if management's guidance is accurate, then it's holding on to its 2020 gains.

In other words, the adoption of telehealth took a giant step forward last year, and doesn't look to be taking a step back anytime soon. That bodes well for Teladoc's business long term, even if 2021 won't be as spectacular as 2020.

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
$33.45 (5.65%) $1.79

*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
332%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/27/2022.

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.