Teladoc: Difference Between Playing The Market And Building Wealth

Summary

Teladoc continues to execute on its strategy, with its revenues expected to grow by approximately 28% CAGR over the next 3 years.

Meanwhile, Teladoc stock price continues to implode day after day, without abating.

However one appraises the situation, TDOC stock is now in the bargain basement.

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Luis Alvarez/DigitalVision via Getty Images Investment Thesis

Teladoc ( TDOC ) has been a brutal investment for many people. However, its underlying prospects remain as strong as ever. Indeed, the business continues to tick along, with all its financial targets the same as they have been for some time.

However, investors are now demonstrably disenchanted with Teladoc, voting with their feet, and leaving its valuation to reflect this. Further, Teladoc’s market cap is now less than $14 billion. For everything the company has built and all its prospects, investors are only asked to pay 5x this year’s revenues. For a company that’s expected to report close to 28% CAGR over the next 3 years? This is now shockingly cheap. Investor Sentiment Goes Grim For Teladoc Stock

Data by YCharts Do you know what the chart above symbolizes? Frustration.

Regret.

Pain.

Hopelessness.

Take your pick. There are very few investors that today look at Teladoc with anything but negative emotions. All kinds of narratives are built around why the stock is down. Too much executive compensation. COVID winner. Too much competition. The list goes on and on. I’m confident you can add a few ”reasons” too.

The fact of the matter is this, it’s a cliche, but it’s true. The best time to get interested in a stock is precisely when nobody is interested. There’s arguably no better time than when there’s nothing but blood on the street.

But of course, this is extremely difficult to do. The compulsion to remove Teladoc from one’s portfolio and ”start 2022 afresh” is simply too overwhelming. But allow me to tell you this, this level of selling doesn’t last forever.

You have already endured the bulk of the pain. From this price point, over the next two years, as difficult as it is to believe, Teladoc’s shares will be higher. The problem is that nobody’s got patience. And I get it. But having the right discipline is the difference between ”playing the market” and building wealth. Teladoc’s Revenue Growth Rates Fizzle Out

( Source )

The big news from its investor day is that management reassured investors that the business has what it takes to grow over the next fiscal year at somewhere around 25% to 30% CAGR. Indeed, this was exactly what management had already stated together with its Q3 2021 results .

Accordingly, even though management proclaimed that the business continues to perform in line with expectations, investors are dumping their stock.Investors are now moving purely on sentiment. If earlier in 2021, investors were buying first and asking questions later. Right now, it’s selling at any cost, and nobody is going to be asking any questions.However, considering Teladoc’s prospects, objectively, there’s much to remain excited about. Teladoc Near-Term Prospects Discussed Teladoc is a virtual healthcare solution. ( Source )As the title of my previous article noted, telehealth is here to stay. What’s more, as the graphic above reminds us since the pandemic there’s been an explosion in the growth in the demand for telehealth. Even though we are still in the early days and the runway is long.However, ironically, it’s worth noting that despite the validation of the business model during the pandemic, and its ability to rapidly scale and pull forward many years’ worth of revenue growth, the stock is now trading at pre-pandemic levels.( Source )Teladoc is building a platform that goes beyond just delivering virtual care on a small number of drugs. Teladoc continues to rapidly expand to a broad value-add ecosystem of patient care. The ability to have one point of call for all the patient’s requirements.Getting patients to embrace Teladoc through channel partners or via employers, being a one-stop-shop for all the patient’s requirements.However, none of this matters right now. Right now, investors are simply pointing out its mediocre profitability. The Bearish Thesis: Profit Margins Leave Too Much to be Desired Let’s not football around and get down to it, Teladoc is another of those so-called ”high gross margin” businesses that simply ends up with very much middle-of-the-road bottom-line profitability: Source : Teladoc Investor Day As you can […]

source Teladoc: Difference Between Playing The Market And Building Wealth