Timing is everything. That’s certainly true in the financial markets, and telemedicine specialist Teladoc Health (NYSE:TDOC) is a perfect example, as TDOC stock enriched the portfolios of traders who bought and sold it at the right times.
The problem is, some folks get greedy. They don’t know when to say “when,” and they’ll stay in the trade even after the buyers have left and the sellers have clearly taken over.
If you already have a position in TDOC stock, don’t overstay your welcome. Feel free to take profits if you have them, as the “thrill is gone” with Teladoc, to quote an old song.
And if you never took a position in Teladoc, consider this as a cautionary note. Just because a stock was red-hot last year, doesn’t necessarily mean that its future prospects are strong.
The Fast Rise of TDOC Stock
At the end of 2019, TDOC was an $83 stock. The American stock market was calm, for the most part, and hardly anyone could have predicted the chaos that was about to ensue.
Then came the most impactful event in recent memory. The onset of the Covid-19 pandemic shook the financial markets to the core, and negatively impacted many businesses — but Teladoc was an exception to the rule.
Instead of collapsing like many stocks did, TDOC stock rallied to $240 in mid-2020, for a return on investment of nearly 200%. The hype phase persisted into early 2021, with Teladoc shares going parabolic and hitting $308 in February.
Telemedicine was obviously, a red-hot market at that time. Many patients didn’t want to incur the health risks of seeing their healthcare practitioners face-to-face, and vice versa.
By pushing TDOC stock up from the $80s to more than $300, the buyers priced in what they assumed would be a persistently fast-growing telehealth market. Moreover, some traders may have assumed that Teladoc was a highly profitable business venture at that point. But, was this actually the case?
Appearances Can Be Deceiving
Going back to the hype phase, which started in 2020 and peaked in February of this year, we can detect a problem with Teladoc.
During 2021’s first quarter, Teladoc was certainly generating revenues. However, there’s a big difference between the top-line and bottom-line results. As it turned out, the company simply wasn’t able to translate the revenues into profits.
For that quarter, Teladoc sustained a net earnings loss of $199,649,000. That result was significantly worse than the net earnings loss of $29,603,000 recorded in the year-earlier quarter.
Thus, appearances can be deceiving as a high share price doesn’t always mean that the company is actually profitable.
The Tide Has Turned
Traders who bought TDOC stock near its peak, despite Teladoc’s negative net earnings profile, learned a harsh lesson in 2021.
During the ensuing months, the share price slid below $200 and then broke down to $150. As of Oct. 27, the Teladoc share price had declined to $138. If the trend is your friend, then TDOC stock simply isn’t friendly to the bulls anymore.
Covid-19 vaccines are widely available nowadays, and restrictions to go out have been lifted, by and large. As a result, doctors’ offices are busy again as the fear of in-person visitations has mostly dissipated.
If you’re hoping that Teladoc will replicate its roaring growth achieved in 2020, don’t get your hopes up.
Besides, Teladoc isn’t the only publicly traded telemedicine company. In other words, there’s competition in a market that isn’t likely to exhibit the same growth rate observed last year.
Maybe you missed out on the hype phase of TDOC stock, and are hoping for a repeat performance.
The problem here is, you don’t drive forward if you’re too busy looking in the rear-view mirror.
It’s entirely possible that Teladoc’s best days are in the past — and even then, the company didn’t report positive net earnings.
Therefore, don’t feel the need to buy TDOC stock, now that the trend is clearly to the downside.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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