Primed for Dominance

While growth stocks have already begun clawing their way back following the losses they suffered earlier this year, there are still former market favorites struggling to bounce back.

One of them is Teladoc Health (TDOC).

To date, Teladoc is still trading at roughly 40% below its previous highs.

While this can be frustrating for its investors, the current situation might just be an opportune time to add this stock to your portfolio. 

Teladoc emerged as the leader in virtual care in 2020 by being at the right place at the right time when the pandemic struck. That year, the company’s revenue rose by a whopping 145% compared to its 2019 performance.

These days though, the stock has lost half of its value. Although that’s definitely a head-scratcher, Teladoc’s 51.5 million paid memberships in the United States alone still make it the most dominant force in this industry.

For a long-term investor, the situation presents a compelling opportunity.

Teladoc is a growing business that’s expanding both in the US and globally. While penetrating more markets would happen over time, the basic footprint has been established. This offers Teladoc much-needed exposure to a massive addressable market.

The global market for telemedicine is estimated to expand from $49.9 billion in 2019 to a jaw-dropping $459.8 billion by 2030.

In North America, which holds roughly 34.4% of the market share in 2020, the telemedicine market generated $19.23 billion during the pandemic.

Taking into consideration Teladoc’s revenue of $967.4 million for its US segments in 2020, it becomes clear that the company is only getting started, as this comprised only 5% of the market size.

If the company maintains its momentum, then the next 10 years would be an incredible journey for Teladoc investors.

Despite the disappointing share price performance of Teladoc in the past months, the company’s actual business has sustained its growth.

Revenue continues to rapidly rise, showing off a 151% growth in the first quarter of 2021.

This impressive growth has prompted Teladoc to boost its full-year revenue guidance to $2 billion, which indicates an 80% year-over-year gain.

Impressive growth has been observed all around, with access fee revenue going up 183% while visit fees climbed 24%.

Considering the size of the market, it no longer comes as a surprise that Teladoc is facing competitive threats.

Amazon (AMZN) and Amwell (AMWL) have recently entered the virtual care market. Even Walmart (WMT) and CVS (CVS) have been working on toppling Teladoc as well.

Despite the competition, Teladoc remains ahead of the pact thanks to its continuous efforts to innovate.

For example, the latest innovation from Teladoc is Primary360.

This product is designed to take virtual healthcare to the next level. It offers personalized service at the patient level. Here’s a preview of how it works.

Traditionally, patients go to their doctors when they discover a health problem. This is a reactive way of dealing with health. In contrast, Primary360 is proactive.

That is, the product monitors the patients individually from annual checkups to ongoing treatments to manage chronic conditions. Through closely monitoring the patients, Teladoc is able to perform earlier diagnoses of potential diseases and help doctors reach better outcomes for treatments.

To better picture the long-term rewards of this company, it’s good to keep in mind that Teladoc is actually the second biggest holding of Cathie Wood’s ARK Innovation ETF (ARKK), next only to Tesla (TSLA).

Teladoc Health emerged as one of the most popular pandemic plays in 2020.

While the stock tumbled when vaccines hit the market, its projected growth trajectory remains promising. In fact, Teladoc’s revenue growth is anticipated to skyrocket over the remainder of this decade, with telemedicine estimated to reach roughly half a trillion dollars by 2030.

For investors on the lookout for long-term plays, Teladoc Health's tumble has presented a good opportunity to add it to your portfolio.