Shares of telehealth leader Teladoc Health (NYSE:TDOC) were up 4.7% today as of market close, even as the broader markets fell modestly on the second-to-last day of 2021. It’s been a tough run for Teladoc, down 53% on the year and 70% off of all-time highs notched in January and February.
Today’s small relief rally isn’t due to any specific news from Teladoc. Rather, a widespread jump in high-growth but loss-generating stocks took place. Small up-and-coming names have fallen out of favor with many investors this year as appetite has switched toward favoring value stocks that benefit from easing of the pandemic. As year end approaches, day-to-day volatility has increased, especially since the arrival of the omicron variant around the Thanksgiving holiday.
Not everyone thinks Teladoc is down-and-out, though. I for one keep scooping up shares of this long-term winner and pioneer of the whole telehealth movement. But of far more interest to you, dear readers, is Cathie Wood, who has also been reporting sizable Teladoc purchases this week. During the last two days (Dec. 28 and 29), Wood’s ARK Innovation ETF (NYSEMKT:ARKK), Ark Fintech Innovation ETF (NYSEMKT:ARKF), ARK Genomic Revolution ETF (NYSEMKT:ARKG), and ARK Next Generation Internet ETF (NYSEMKT:ARKW) scooped up Teladoc shares. https://arkinvestdailytrades.com/
That doesn’t mean you should necessarily follow suit. Teladoc thinks it will continue to grow revenue at an average 30% per annum pace in the coming years, but by most metrics, the company still loses money — except on an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) basis. Though healthcare is ripe for disruption and technological improvements, Teladoc is also facing a slew of new competitors as companies like Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT) also try to cash in on the virtualization of care.
What that means is Teladoc is likely to remain a highly volatile investment for some time. Nevertheless, if you believe the company’s leading connected healthcare platform will continue to expand, remember to be patient and stay focused on the long-term potential rather than the daily volatility.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.