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Why Has Teladoc Health Stock Underperformed?

By Keith Speights and Brian Orelli, PhD – Sep 19, 2021 at 7:03AM

Key Points

  • The steep decline in Teladoc's share price is partially due to investors' concerns about the stock's valuation.
  • Some investors have also viewed Teladoc as primarily a pandemic play.

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The virtual care stock is down more than 50% from its highs earlier this year.

Teladoc Health's (TDOC 0.48%) shares skyrocketed nearly 140% last year. So far in 2021, though, the stock is down close to 30%. In this Motley Fool Live video, recorded on Sept. 8, Fool contributors Keith Speights and Brian Orelli answer a viewer's question about Teladoc's dismal performance.

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Keith Speights: Nido has a question that received quite a few upvotes. The question is, "What do you think about Teladoc Health? (TDOC is the ticker.) Not doing as well as we expected after the acquisition of Livongo." Any thoughts on that?

Brian Orelli: I think it was probably, mostly, a valuation issue. I think Teladoc probably just got ahead of itself.

During the pandemic, people were looking for stocks that would benefit. I think Zoom probably is the same way. We've seen its sales go up and up, but its valuation I don't think has peaked a little while ago, and so I think that's part of the same issue for Teladoc. I think you're a shareholder, right?

Speights: I am, and what you're saying is a big part of it. Also, I think some investors might have erroneously, in my view, viewed Teladoc Health as a pandemic play only, or stay-at-home play. I do not think that's the case.

I think telehealth is absolutely here to stay. Telehealth will grow, and beyond telehealth, virtual care in general. Chronic disease management, the question mentioned the acquisition of Livongo. I think that was a good acquisition for Teladoc. I thought it brought a good platform into its lineup, and there's a great opportunity for cross-selling there.

I think over the long run, Teladoc Health is going to do very well. I think it's going to be a big winner. I think what we've seen this year is partially what you were saying, Brian, some concerns about valuation. We did have a migration of sorts from growth stocks to more, or I should say, less "growth-y" stocks earlier this year. I think there are some investors who pulled out of Teladoc because they think that people are out working more. They're not going to use telehealth as much.

I think over the long run, we're going to see this stock be a very big winner. As you can tell, I'm still a big fan of Teladoc.

Keith Speights owns shares of Teladoc Health. The Motley Fool owns shares of and recommends Teladoc Health and Zoom Video Communications. The Motley Fool has a disclosure policy.

Stocks Mentioned

Teladoc Health Stock Quote
Teladoc Health
$27.22 (0.48%) $0.13

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