American Well Corp (NYSE:AMWL) hasn't been doing too well since going public back in September. Up a modest 4%, the company's been struggling of late as the demand for telehealth could be down with investors more bullish about the fate of the economy now that multiple vaccines look like they soon may be available.
On Nov. 12, the company reported its third-quarter results and its first as a public company. Amwell reported tremendous growth with sales of $62.6 million soaring 80% year over year. It recorded visits of 1.4 million which were a whopping 450% higher than the same period last year.
Amwell's expecting that for the full year, its revenue will come in between $235 million and $239 million, which would be about 60% higher from the $149 million it reported in 2019.
The company's growing but the question mark is whether these impressive growth rates will hold up if the economy gets back to normal and people don't need to rely on telehealth anymore. Today, the stock's trading at 23 times its sales, which is steep given that investors are only paying 18 times revenue for shares of rival Teladoc Health (NYSE:TDOC) .
With the end of the coronavirus pandemic now in sight, the bullishness around telehealth could soon be subsiding, and that's bad news for both Amwell and Teladoc. Despite the strong growth numbers Amwell posted in Q3, it wouldn't be surprising for the stock to continue sliding and that's why investors may want to consider holding off buying shares of the company until its stock comes down to a more reasonable valuation.
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