Why Teladoc Stock Fell 11% in July

What happened

Shares of Teladoc (TDOC 0.20%) slipped last month after the telehealth specialist posted a disappointing earnings report and fell earlier in the month, though there was little news out on the stock. 

According to data from S&P Global Market Intelligence, the stock finished the month down 11%. The chart below shows its performance over the month.

TDOC data by YCharts

So what

Teladoc was an early winner during the pandemic, but it's down substantially over the last year on concerns about its valuation and ability to turn a profit, and the second quarter was a reminder of that.

Image source: Teladoc.

In the second-quarter report, Teladoc posted another round of strong revenue growth aided by the acquisition of Livongo and InTouch Health a year ago. Sales jumped 109% to $503 million, which edged out estimates at $500.1 million, but the company again posted a wide loss on the bottom line. On a generally accepted accounting principles (GAAP) basis, Teladoc lost $0.86 per share, worse than the consensus at $0.56, and shares outstanding doubled over the past year so its actual net loss expanded from $25.7 million to $133.8 million. 

Adjusted EBITDA, however, rose from $26.3 million to $66.8 million, showing, in part, the impact of share-based compensation. Paid membership was essentially flat in the quarter, showing some challenges as the company laps the lockdown quarter a year ago.

CEO Jason Gorevic said, "We have solid momentum heading into the second half as the market embraces the unified care experience that only Teladoc Health has the breadth and scale to achieve."

Now what

Teladoc fell as much as 12% after the earnings report, though it recouped all those losses that day as some investors saw the sell-off as a buying opportunity for the healthcare stock. Still, analysts generally lowered their price targets on the news as Teladoc's guidance also called for wider losses than expected. It sees net loss of $0.68 to $0.78 and revenue of $510 million to $520 million in the third quarter, representing modest sequential growth on the bottom line.