What Happened: Shares of digital medical services platform Teladoc Health (NYSE:TDOC) fell 5.08% in the pre-market session after the company reported third-quarter results, with revenue coming in below Wall Street's expectations. Revenue guidance for the next quarter came in below Consensus, with the weaker growth driven by lower-than-expected total visits within the Teladoc network. Additionally, while EPS beat by a bit this quarter, EPS guidance for next quarter missed Wall Street's estimates. Overall, the results could have been better.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Teladoc? Find out by reading the original article on StockStory.
What is the market telling us: Teladoc's shares are very volatile and over the last year have had 35 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was three months ago, when the stock gained 10.1% on the news that the company reported a bullish 'beat & raise' second quarter. Specifically, Teladoc beat slightly on revenue and more convincingly for adjusted EBITDA. Adding to the positives, the company raised full year guidance for revenue, adjusted EBITDA, and EPS. While next quarter's revenue guidance came in slightly below Wall Street's expectations, the market seemed focus on the full year guidance raise.
Additional tailwinds to the big increase in Teladoc shares (in addition to the strong quarter itself) are sentiment and short interest. Going into earnings, market and investor sentiment were negative. As an example, Jefferies published a June 26, 2023 report calling out how "telehealth is becoming commoditized" and that "slowing industry growth overall raises questions around achievability of LT targets." Additionally, short interest in the stock was 16% going into the quarter. These investors betting against the stock could be covering their short positions today on the better-than-expected quarter, giving further fuel for the stock to rise.
Teladoc is down 23% since the beginning of the year, and at $17.35 per share it is trading 47.9% below its 52-week high of $33.31 from November 2022. Investors who bought $1,000 worth of Teladoc's shares 5 years ago would now be looking at an investment worth $263.49.
