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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 …….
Source: https://seekingalpha.com/article/4478173-teladoc-stock-cheap-valuation-bargain
