The stock of Teladoc Health (TDOC 2.56%) exploded higher on Friday, up 11.8% as of 12:20 p.m., as shares of the telemedicine pioneer struggled to defy a downtrend that has cost the company a staggering 66% of its market capitalization since February this year.
The jump could be a result of a dire warning from President Joe Biden yesterday, or in the longer term, the potential to expand the business internationally.
The first and most obvious reason: President Biden held a press conference yesterday featuring the chilling warning that America is facing a "winter of severe illness and death."
The omicron variant of COVID-19 is "here now and it's spreading, and it's going to increase," Biden said. At about the same time, The New York Times announced that new U.S. cases of COVID are averaging 124,000 daily, up 31% from two weeks ago, and the World Health Organization warned that omicron is more transmissible than delta, can evade immunity from vaccines, and is better at re-infecting even patients who survived infection with earlier variants of the coronavirus.
All of these sound like pretty good reasons for people to avoid going out in public, and instead get their medical advice via Teladoc this winter.
The other possible reason for Teladoc's rise today is more auspicious. Looking forward to the day when the pandemic has passed, life has returned to normal, and Teladoc's business is growing more normally as well, it's conceivable that it might want to expand internationally, where it currently gets less than 12% of its revenues.
That potential effort just got a little bit easier because, as The Wall Street Journal reported earlier this week, the Chinese government is cracking down on some of Teladoc's biggest (future) rivals. "Increased regulatory scrutiny and impending rule changes for the internet healthcare industry [in China] have taken the wind out of the sector's once-highflying stocks," the Journal said. The telemedicine subsidiaries of Chinese tech giants Ping An, Alibaba Group Holding (BABA 1.14%) and JD.com (JD 1.12%) are all down 50% to 70%, making them "among the worst-performing internet-technology stocks this year," the Journal added.
That may not mean much to Teladoc today, but long term, the more damage China does to its own telemedicine stocks, the less competition Teladoc could face as it expands overseas.