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Why Amwell Stock Crashed Today

By Keith Speights - May 13, 2021 at 4:13PM

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Investors are concerned about the telehealth company's slowing revenue growth.

What happened

Shares of American Well (AMWL -1.06%) crashed on Thursday, closing the session 21.7% lower. The decline came after the telehealth services company delivered its first-quarter update after the bell on Wednesday.

So what

Amwell reported Q1 revenue of $57.6 million, up 7% year over year. That fell short of the analysts' consensus estimate of $58.75 million. The company's net loss of $39.8 million, or $0.16 per share, though, was better than the loss of $0.19 per share expected by analysts. 

A woman with pill bottles and a laptop showing a smiling physician

Image source: Getty Images.

The main reason why the healthcare stock plunged, however, was that Amwell's sales growth is slowing significantly. In the previous quarter, the company announced year-over-year revenue growth of 34%.

This deceleration shouldn't be surprising. The beginning of the COVID-19 pandemic last year provided a huge catalyst for telehealth services providers. It would be unrealistic to expect them to be able to sustain those growth rates.

Amwell Chairman and co-CEO Ido Schoenberg viewed his company's Q1 performance in a different light than many investors. "Our first quarter results represent a strong start to the year and demonstrate continued momentum across our business," he said.

Now what

Amwell maintained its previous full-year 2021 guidance for revenue in the range of $260 million to $270 million. At the midpoint, that would be a year-over-year increase of 8%.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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