Hi all,
I was wondering what caused the Teladoc drop of 6% this morning. All I could find was the rumor that Amazon is planning to offer primary medical care:
https://www.businessinsider.com/teladoc-stock-price-amazon-p…
What do you make of this - do you see this as a realistic scenario?
Are there be other reasons for the drop that you are aware of?
Cheers,
Sven
Even if the rumor is true, I’m not concerned about it. Look at what happened in the past with other companies that took a hit when Amazon actually did enter the space such as supermarkets. Costco was one of the companies hit when Amazon bought Whole Foods; they recovered a long time ago and now are at all-time highs. That’s just one example. There are plenty of others. I would consider this a buying opportunity.
Kevin
Long TDOC.
It’s definitely due to the Amazon news. Analyst Richard Chu, who has 40% of his portfolio in TDOC (and previously LVGO), posted a note on Twitter:
https://twitter.com/richard_chu97/status/1339226782956982274…
Summary: He’s not worried. The Amazon offering is an internal benefit that they’re looking at expanding to other large companies. They’ve had minimal interest thus far and are struggling to hire for the expansion. This offering would compete with the core Teladoc business, not any of their integrated acquisitions.
Me: Certainly, it’s something to keep an eye on. Amazon has proven to be a customer-centric company willing to lose money for long periods of time. They’ve probably got a long way to go to catch up to what TDOC is now offering with the Livongo merger.
Amazon Care looks like old news to me.
I thought selling was a result of the bearish take from this fool strictly on valuation.
https://www.fool.com/investing/2020/12/16/is-teladoc-stock-a…
In any case, i’d buy more if i didn’t already own so much. Until TDOC disappoints me with its results, my intention is to stay with it.
But i had a LVGO multi bagger at the time of the merger. Why the stock has declined since, IDK. The first combined Q report was a beat and raise on all fronts.
It’s possible for TDOC to lose its leadership position in the space with increasing competition out there, but until i see some serious evidence, i’m staying with a company with the best track record and i think the strongest leadership.
And, IMO, a compellingly low stock price.
So, Berkshire, JPMorgan and Amazon experimented with company provided health care. It didn’t really disrupt anything and Amazon appears to be moving forward on its own initiative separate and apart from JPM/Berkshire.
This recent Bloomberg article throws some shade on the whole experiment. https://www.bloomberg.com/news/articles/2020-05-21/bezos-buf…
Mike
guess what happen -she picks up 520,695 of tdoc today- i think she likes the stock. maybe she wrote the press release. enjoy the holidays , jim
For the reasons mentioned in the thread I’m not super worried about this
In terms of stock performance if you remember, on November 17 news broke that Amazon was getting into the prescription medication game.
Shares of GDRX and CVS plummeted, but as of today are back right around their price before that dip.
Worth remembering for the TDOC shareholders.
-marketmusician
“she picks up 520,695 of tdoc today”
Indeed–and that’s on the heels of the initial major buying in November.
She/ARK said they like the Livongo component. They barely had any TDOC until then, maybe 0.3% in ARKG or so I vaguely recall.
Not sure if these are today’s or yesterday’s % but here we go:
TDOC is #5 in ARKW at 3.32%
TDOC is #6 in the flagship ARKK at 4.07%
TDOC is #6 in ARKG at 3.96%
TDOC is #36 in ARKF at 0.99%
No, not in ARKQ 
This is about as big as a position not named TSLA or SQ gets. It is roughly on par with NVTA and CRSP.
By the same token, I would worry if ARK suddenly starts selling more than trivial chunks at some point (they do “trade around the edges”).
Not sure how many still remember the discussion of Amazon’s invasion into ESTC’s and MDB’s fields a couple of years. How have the two names performed since then? IMO, AMZN is so invasive that it has become a handy tool for the big boys to manipulate stock prices.
While I’m sure this drop was in fact caused by the Amazon news, that’s not what would concern me about TDOC.
I was a LVGO shareholder but was already getting skittish about long term sustainability of their hypergrowth and sold before the merger was announced.
When the merger was announced I expressed my bearishness toward TDOC / LVGO because it seemed like selling high on LVGO’s side and an poor attempt to buy hypergrowth on TDOC’s part.
I haven’t followed the story in months, but I looked into it this morning. Here’s what concerns me. It appears TDOC’s attempt to buy hypergrowth has failed. Here’s LVGO’s sequential growth the last few quarters:
Q1: 37%
Q2: 34%
Q3: 15%
Yikes.
Bear
Bear,
Historically the most of LVGO growth was happening in Q1 and the least in Q4. It is nothing new. See below:
Q2’18 - 27.2%
Q3’18 - 18.2%
Q4’18 - 12.8%
Q1’19 - 51.4%
Q2’19 - 27.1%
Q3’19 - 14.1%
Q4’19 - 7.5%
Q1’20 - 37%
Q2’20 - 34%
Q3’20 - 15%
Yes, during Livongo earnings calls, management would often talk about how the business is highly seasonal. This surprised me, but as VTX3 showed, it becomes obvious when you start to look at historical quarterly growth.
Q2’18 - 27.2%
Q3’18 - 18.2%
Q4’18 - 12.8%
Q1’19 - 51.4%
Q2’19 - 27.1%
Q3’19 - 14.1%
Q4’19 - 7.5%
Q1’20 - 37%
Q2’20 - 34%
Q3’20 - 15%
Looking at 2020 alone, things look like a frightening drop. However, when you look at 2019 and 2018, you see how incredibly seasonal the business is. As big as the drop in QoQ growth was in 2020, historically it is actually a smaller drop this year relative to years past. During earnings calls, they have mentioned that they sign up most clients in Q1, and this shows heavily in the above numbers.
Long TDOC (14% position)
Yes, during Livongo earnings calls, management would often talk about how the business is highly seasonal. This surprised me, but as VTX3 showed, it becomes obvious when you start to look at historical quarterly growth.
Thanks both of you. I probably shouldn’t have tried to wade in…I really haven’t followed either. I’d still be concerned about how growth will be going forward on LVGO’s small base of revenue, but I really don’t know. Just seems like a complicated story with TDOC/LVGO. Hope y’all are right and the market is wrong, but I do think it’s worth pointing out that the market is not seeing what you’re seeing, and usually that means something. I’ll leave it to those invested, though!
Bear
Certainly, it’s something to keep an eye on. Amazon has proven to be a customer-centric company willing to lose money for long periods of time. They’ve probably got a long way to go to catch up to what TDOC is now offering with the Livongo merger.
While I agree with you, and have many excellent customer-service experiences with Amazon, the problem that this particular venture will face isn’t one of attracting customers. The customers initially will be Amazon employees. The problem will be attracting talent to operate the whole thing.
Anecdotes are not sufficient, but they can shed some light on a situation. I have a friend and fellow investor is a hospitalist who manages contract physicians across many hospitals in the Midwest. He was contacted by Amazon Care to join their team, doing a similar kind of job managing remote physicians working in several locations in Kentucky. He said the offer was not competitive, and offered little in the way of security. He quickly declined.
To cut costs, you cannot pay market wages. Amazon will find it difficult to scale this business. I put my money on Teledoc in a head-to-head competition in the marketplace.
Tiptree, Fool One guide, long AMZN (no position (yet) in TDOC)
The thesis here is all about your belief TDOC will disrupt a VERY complicated medical system. I was a huge LVGO bull, and it turned out to be the best investment of my entire career. I exited because of how much I believe this merger changed the competitive landscape. TDOC/LVGO may indeed see another huge customer add in Q1. That doesn’t change the fact the combined entity has a much more difficult path to travel. In my opinion, the recent AMZN news only reemphasizes that. Here’s what I wrote in August. I believe it still applies today.
LVGO – A huge July rocketed Livongo from #4 all the way to my top portfolio spot. I thought my August writeup would simply celebrate another stellar quarter, which it most certainly was. However, this recap ended up spinning in an entirely different direction. There was major Livongo news August 5 when it was acquired by Teladoc. Like many shareholders, I was disappointed LVGO gave up on going it alone. I did not see the announcement until well into the day so had time to scan the details along with some initial market reactions. After reviewing everything I decided to sell my position in full. I have passed on TDOC twice previously and do not have interest in owning it now even as only 58% of the combined entity.
TDOC/LVGO exits this deal a much different company with a much more complicated story. As a standalone Livongo was the spunky little upstart making inroads. This new pairing immediately faces a bigger, more convoluted market. Could TDOC/LVGO disrupt medicine? Sure. Will the more entrenched bureaucracies of doctors, hospitals, insurance companies, regulators and politicians let it happen without wrangling for their piece of the action? Doubtful. Don’t get me wrong. I am all for patients having a better healthcare experience. However, I say that as a fairly experienced US consumer in a system that currently makes it virtually impossible to determine how much a treatment even costs. I do not see that changing any time soon regardless of how many newfound operational synergies TDOC/LVGO says it has.
I have previously encountered healthcare-related stocks where the oh-so-obvious benefits of the company’s service should logically win the day. My experience is it never happens quite as easily as you think if it even happens at all. That is why I was already paying extra close attention even as Livongo became my biggest holding. I fail to see how TDOC/LVGO avoids the same slog. Despite management’s cross-selling giddiness, I will hold my excitement at least until the acquisition goes through. In the meantime, I am perfectly content to step aside for a while and see how things develop…I wish those who held the best of luck and sincerely hope Livongo and Teladoc continue to make the world a healthier place.
<<LVGO – A huge July rocketed Livongo from #4 all the way to my top portfolio spot. I thought my August writeup would simply celebrate another stellar quarter, which it most certainly was. However, this recap ended up spinning in an entirely different direction. There was major Livongo news August 5 when it was acquired by Teladoc. Like many shareholders, I was disappointed LVGO gave up on going it alone. >>
To put some perspective on LVGO/TDOC, well over 50% of the last gain in LVGO was in less than 4 weeks leading up to the merger announcement. Obviously one of the worst kept secrets. The rocket in July was not due to LVGO but due to rumor leak. So while many of us were disappointed in the acquisition, a good portion of that last $50 gain may not have happened without it.
The current $193 TDOC price is equivalent to about $125 LVGO. So it’s down $25 from all time high the day before the announcement but up over $50 since the 4 weeks before the merger.
The latest quarter showed acceleration. I’m looking forward to seeing that continue.
Greg
Sorry, this is question is something hard for me to answer…
…if Amazon sees this as a big opportunity and the beta testing with their employees work out well. Then why wouldn’t Microsoft, Google, Apple, Costco ( who also have pharmacies ) emulate that? They all have access to a ton of data and the cash. So looks like a fragmented market in the long run.
I had liked LVGO’s offering but on the day of the news about the merger with TDOC, I sold whatever LVGO shares I had.
My philosophy is to buy when the company is likely the winner of its niche, and a few quarters from becoming a “money printer” with high FCF margin.
TDOC is far from that point IMHO. Medical world is very very complicated, super hard to scale, so I’m always skeptical.
BTW, I personally used Amazon care when my husband was working there. Very convenient, but not better than any other telemedicine platforms, it still depends on the quality of the doctor himself. Personally I think to B business maybe easier to scale and less complicated to run in medical world like to help provide individual clinics with telemedicine solutions. I guess it’s a good opportunity for Zoom.
Like stocknovice, I was a huge LVGO bull, and it became the best single investment ($-wise) and largest holding of my life, although our reactions to the announced merger have since diverged. Initially, I also was upset with the announcement as I thought LVGO would have continued to outperform on its own (although I think it had gotten ahead of itself). As I researched the merger over the following couple weeks, I came to the conclusion that it’s going to turn out to be a fantastic company/opportunity. We had too many posts about why/why not at that time, so I won’t go into those now, you can search them up if you want. Anyway, I ended up purchasing a couple percent holding of TDOC before the merger completed (mostly to replace the cash/dividend I got from the LVGO shares converting to TDOC) so that it would remain one of my top positions (currently #2, was #3 until ZM stumbled out of the top).
I posted these numbers after the last earnings call but have added my estimates for 4Q20 and 1Q21 in bold italics. I arrived at the LVGO numbers by what I consider conservative QoQ increases (since they did not give guidance with the ensuing merger), and TDOC was from the same $ beat ($4M above the high end) on the company’s Q4 guidance as last quarter, and a guess on my part for Q1.
LVGO
Revs QoQ Rev Gth YoY Rev Gth
1Q19 $32 51% 157%
2Q19 $41 28% 156%
3Q19 $47 14% 148%
4Q19 $50 8% 137%
1Q20 $69 37% 115%
2Q20 $90 30% 120%
3Q20 $106 18% 127%
__*4Q20 $115 8% 127%*__
__*1Q21 $150 30% 117%*__
TDOC
Revs QoQ Rev Gth YoY Rev Gth
1Q19 $129 5% 43%
2Q19 $130 1% 37%
3Q19 $138 6% 24%
4Q19 $156 13% 27%
1Q20 $181 16% 40%
2Q20 $241 33% 85%
3Q20 $289 20% 109%
__*4Q20 $308 7% 97%*__
__*1Q21 $339 10% 87%*__
Going forward I don’t know if TDOC will be breaking out the LVGO numbers separately, I hope they do for at least a year, until the merger is lapped. Regardless, the above numbers (combined) for the newly merged company would show the following growth from my estimates:
TDOC + LVGO
Revs QoQ Rev Gth YoY Rev Gth
__*4Q20 $423 7% 105%*__
__*1Q21 $489 16% 96%*__
(Hopefully I don’t have any errors in my numbers.)
So I see tremendous growth being reported for at least the next couple earnings releases. I wouldn’t venture to guess beyond that (with so many variables in play), but I think the market has been waiting for the combined company’s release before they will give it a fair valuation. I think that will come in the next 1-2 releases and I consider the current “depressed” stock price a gift. I also think they have a good chance at beating their upcoming numbers with the cross selling and international opportunities available as they stated they only had 25% overlap in customers at the time of the merger.
Bear stated: …I do think it’s worth pointing out that the market is not seeing what you’re seeing, and usually that means something.
I don’t agree with this statement (that the market is always right). In my experience, I would say the market is “right” on a stock price about 50% of the time, 25% it’s too high, and 25% it’s too low (by “right”, I mean valued where it should be). It constantly overcorrects in both directions. In the last 4-5 years that I’ve been following my stock holdings closely, I could point out numerous examples of this. I’m not saying the market dropping or raising the price on an equity because of some news is wrong, but I’m saying the amount is overdone in quite a few instances, and therein lies the huge opportunity for us as individual investors. It can be news that moves the stock price, sector rotation, going out of favor, consolidating, building a base, many different names for what usually ends up being a short term move that can be taken advantage of.
A couple recent examples:
MDB - currently up 65% in 6 weeks (overcorrected too high currently IMO).
FSLY - dropped to the low $60s (overcorrected too low IMO), currently back up over $100 (up over 60% in 6 weeks).
CRWD - IPO’d around $60 rose to $100, dropped to $30, back up to over $180. I built my position through the entire roller coaster because the numbers/fundamentals here never changed, they have been stellar every report since IPO, and it eventually paid off (my current largest holding), but took time to play out. So if the market is always right (or efficient, whatever you want to call it), why the drop to the $30’s? Never should have happened, but that was my/our opportunity.
And I see the same thing now in TDOC, the market has held the price down too low for the growth the company is and will be showing. Yes, there are a lot of factors currently that will play a role in it’s future price swings. The largest unknown being the CV and vaccines as TDOC is looked at as a COVID stock so it’s price will be impacted by these things. But I think once their next couple quarters of numbers come out, showing triple digit growth (or very close), we’re going to see a jump in the stock price.
I’ve never posted my holdings before because I usually don’t feel I can add much to the amazing conversation and analysis around here, but since I’ve put my 2 cents in on TDOC, you can see below that I have put my money where my mouth is on this one. I very well could be wrong here, but I think the risk/reward is pretty good (do your own DD).
CRWD 17.50%
TDOC 15.04%
DDOG 12.23%
DOCU 10.39%
PTON 8.07%
ZM 7.73%
MDB 5.59%
NFLX 5.09%
AYX 4.13%
ESTC 3.82%
OTRK 3.63%
OKTA 2.99%
Cash 3.80%
100.00%
The outlier is of course NFLX, my last holdout of an investing life before Saul’s board. Sold a bunch of it this year, but this remaining bunch is in a taxable account so I’m waiting till next year as this year I owe way too many taxes already (thankful for having that problem, even in my first year of retirement). 
My big hesitation with TDOC is that they rely on the insurance companies. I see it everyday with work. If a drug company doesn’t offer enough reimbursement or if the insurance provider just flat out doesn’t want to pay for a certain drug anymore then they will blacklist that drug to all their clients and there’s nothing anyone can do. I have heard quite a bit about the virtual healthcare meetings over this last year while working with doctors. A big thing, as messed up as this is, is that insurance providers do not want their clients going to virtual visits as opposed to inperson. The reason is because more patients miss or are no shows to in person visits while those same rates for virtual visits are much lower. Therefore the insurance companies are having to pay more for covering more visits by their patients. I can see this being a big hurdle when things get back to normal. It’s very frustrating but I’m having a difficult time diving in with TDOC when their business can change any year if insurance providers drop them.