Teladoc (TDOC) is a poster child for the post-pandemic stocks that crashed. Roku (ROKU), Peloton
(PTON), and DocuSign (DOCU) are other examples. Teladoc has business problems that are not related
to the pandemic.
In the first quarter, the company posted a Q1 EPS loss of $41.58. Revenue grew by 24.6% to $565.4
million. Teladoc recorded a massive $6.6 billion, or $41.11 a share, in a goodwill impairment charge. This
non-cash cost is an admission that it overpaid for Livongo. In hindsight, the company should not have
acquired the company. After the deal, it failed to retain key executive staff. This weakened the value
Livongo would have contributed to its growth.
ARKK ETF investors lost a bundle after TDOC and Tesla (TSLA) stock fell last week. ARK relies on
disruptive innovation in the next 5-10 years to justify the buy. Yet TDOC stock closed at below $35 last
week, down from the $178.68 high for an 81% loss. Still, ARKK bought more shares on the dip. It will bet
on at least a short-term rebound. Investors should not follow this trade.
Teladoc is not growing fast enough to justify its over 30 times Price/Free Cash Flow ratio.
Consider traditional healthcare firms with strong, positive cash flow instead.
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