What happened
Shares of Teladoc Health (TDOC -0.07%) were moving backward last month after the telehealth company received a number of negative analyst notes and pulled back along with the broader market fears in the second half of August.
According to data from S&P Global Market Intelligence, the stock finished the month down 16%. As you can see from the chart below, most of the decline came in the second half of the month, due to an analyst downgrade and fears of rising interest rates.
So what
Teladoc opened the month flat even though it received two analyst downgrades. Cowen lowered its rating from outperform to market perform due to macro headwinds and analyst Charles Rhyee said the company would struggle to meet its 2022 guidance.
Meanwhile, Berenberg downgraded the stock to hold due to "underwhelming execution." Analyst Dev Weerasuriya said that customer acquisition costs were deteriorating and that there's little to be enthusiastic about over the next year.
The following week, Cathie Wood's Ark Investment Management bought more than 300,000 shares; Teladoc remains one of the company's top holdings. It also got a buy rating from D.A. Davidson.
The stock peaked on Aug. 15 and then plunged on Aug. 17 after Guggenheim downgraded the stock to a sell. Analyst Sandy Draper said the stock would remain pressured by a weak consumer segment, a strong dollar, and a challenging macro environment.
Teladoc stock sank again on Aug. 19 as stocks tumbled when Federal Reserve Chair Jerome Powell said ongoing interest rate hikes could lead to economic pain. The stock briefly rebounded on news that Amazon was pulling the plug on its Amazon Care telehealth venture, but those gains were short lived as Teladoc slumped to finish the month while the broad market continued to pull back on fears of a recession and rising interest rates.
Now what
Teladoc was a big winner during the pandemic, but the stock has plunged over the last year. The company remains deeply unprofitable and its revenue growth has slowed dramatically. The top line increased just 18% in the second quarter to $592.4 million, and it took a $3 billion impairment charge on its acquisition of Livongo Health, following a $6.6 billion write-down in the first quarter, showing that management has been a poor steward of capital.
While Teladoc is poised to be a leader if the market shifts to telehealth, at this point it looks like management has pursued acquisitions aggressively, and the healthcare company may have to slash costs to win back investors.
