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TDOC stock is overvalued after its liquidation


  • TDOC’s stock is like a falling knife now. Trying to catch Teledoc at this stage is dangerous, risky and without any logic.
  • Teladoc Health (TDOC) decreased by 64% in 2022.
  • It’s a bad idea to buy stocks before major events like the earnings release.
  • The company lowered its guidance for 2022, which is not a positive sign, and expects a bigger net loss.

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Teladoc Health (NYSE:TDOC), a leader in whole-person virtual care, underperformed the U.S. stock market in 2022 by a wide margin. the S&P500 has losses of 18% and the stock of TDOC is down about 64%.

The first quarter 2022 results sent TDOC stock into a tailspin as on April 27 the closing price was $55.99, the date the results were announced, and the next day the stock fell 40 %.

There are now two scenarios to consider. The first is that this sell-off may end soon and the stock will soon bottom out. I argue this is the worst idea because trying to be a hero and catching a falling knife is too risky.

The second scenario is to expect further weakness and avoid the TDOC stock. This is the preferable scenario, and here’s why I support it.

Teleprinter Company Current price
TDOC Teladoc Health, Inc. $32.74

The fall does not make TDOC stock a buy

Is Teladoc Health overrated? Before answering this, it is trivial to refer to my previous article on Teladoc Health.

I had cited five main reasons why I didn’t think the stock was a “buy” at that time, including the annual revenue slowdown, poor trading operations, a long-term decline in gross margins, a dilution of shares and the fact that the company lost money from 2017 to 2021.

Now let’s move on to the question of whether the stock of TDOC is overvalued. Looking at the book value of 0.5, you might think there is a bargain here. The price-to-sales ratio of 2.3 tells a different story and the price-to-cash-flow ratio of 29.4 presents a premium of 58.2% over the healthcare sector median value of 18.5.

As the company is not profitable, I give little importance to the low P/B value ratio.

Buying stocks before earnings is a bad idea

Imagine you had the idea to buy shares of Teladoc Health the day before its first quarter 2022 earnings announcement. As Cathie Wood did.

Not a good idea, not a good decision. I don’t say smart because the odds are 50% in favor and 50% against any stock up or down when earnings are released.

Could the stock have rebounded instead? Sure, but consider that 50% chance doesn’t give you a competitive advantage when it comes to investing. It’s like rolling dice and making investment decisions. There is no analytical approach. I believe that given the poor fundamentals of the company, the odds were a bit higher that the stock would go down like it did.

Continued selling pressure

The only key point in the Q1 2022 earnings report to draw your attention to is not the 25% year-over-year increase in sales growth or the massive net loss of 6,674, $5 million versus a net loss of $199.6 million in the first quarter of 2021.

The orientations for 2022 are at the center of the concerns. For the full year, revenue is expected to be between $2.4 billion and $2.5 billion, lower than the previous forecast of $2.55 billion and $2.65 billion. Adjusted EBITDA is estimated at $240-265 million, which is lower than previous expectations of $330-355 million. Net loss per share is expected to be $43 to $43.50, higher than the previous estimate of $1.40 to $1.60.

These reviews don’t look good at all. Expect greater volatility for TDOC stocks and avoid catching that falling knife. It can hurt a lot.

As of the date of publication, Stavros Georgiadis, CFA had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

Stavros Georgiadis is a CFA charter holder, equity research analyst and economist. He focuses on US stocks and has his own stock market blog at thestockmarketontheinternet.com. He has written various articles for other publications in the past and can be contacted at Twitter and on LinkedIn.



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