What happened
Shares of Teladoc Health (TDOC -4.78%) had tumbled 5.5% lower at 10:50 a.m. ET on Wednesday. The only news from the virtual care provider was that it plans to announce first-quarter results on April 27, 2022. This obviously wasn't the reason for the stock's decline.
It's likely that today's sell-off was largely the result of overall market volatility. Major market indexes fell on Wednesday because of investors' worries about the potential for the Federal Reserve to aggressively raise interest rates to combat inflation.
So what
Most stocks tend to be swept up in strong overall market moves, whether those moves are up or down. However, there's a reason the underlying cause of today's market move affects Teladoc Health.
The company isn't profitable yet. It's possible that Teladoc will need to borrow money in the future to fund its operations and expansion plans. If interest rates rise significantly, Teladoc's cost of borrowing will be higher. As a result, its bottom line could suffer.
Image source: Getty Images.
To be sure, this isn't a huge concern for Teladoc right now. The company's cash position totaled close to $896 million at the end of 2021. And while Teladoc continues to post losses, its bottom line is improving. However, investors don't always think about these kinds of details in the heat of the moment when the overall market is falling.
Now what
Instead of worrying about what might happen, the best thing to do is focus on how Teladoc's business is actually performing. Investors will learn more on that front when the company provides its first-quarter update later this month.
