When COVID first started to worry equity markets in early 2000, one of the names investors immediately flocked to was telehealth provider Teladoc (TDOC).  TDOC was the perfect COVID play as it enabled people to continue seeing doctors through digital means at a time when the world was locked down.  TDOC actually performed very well in the normal months leading up to COVID, and shares continued to shoot higher even as the broad market declined in late February and March 2020.  By early August 2020, TDOC was up over 100% since 2/19/20 — the date of the high point for the S&P just prior to the COVID Crash.  After a consolidation period in the fall and early winter 2020, TDOC went on another run from December through February of this year and was up nearly 150% YoY on February 19th of this year.

While TDOC was a beloved stock during the first stages of the COVID pandemic, it has been a serious drag over the last five months.  Since peaking in mid-February, shares are down roughly 50% from their highs.  Notably, as TDOC has been falling this year, traditional health care providers like hospital company HCA and healthcare provider and insurer UnitedHealth (UNH) have been rallying to new highs.  As shown below, the six-month chart patterns for HCA and UNH couldn’t look more different than the chart of TDOC.  Click here to view Bespoke’s premium membership options.

What we find most surprising is that Teladoc (TDOC) is now underperforming both HCA and UNH since 2/19/20 when SPY hit its pre-pandemic high just before COVID began worrying markets.  As shown below, at one point earlier this year, TDOC was outperforming its traditional health care competitors by more than 100 percentage points.  That outperformance has been fully erased over the last five months.  Since 2/19/20, TDOC is now up just 29% versus gains of 45% for HCA and 34% for UNH.

Last year there was a lot of talk about telehealth becoming one of the biggest long-term trends that we’d see accelerate because of COVID.  That trend could certainly continue over the coming years and decades, but TDOC’s recent performance just goes to show you that sometimes the best-laid plans don’t necessarily play out the way investors may expect them to, and past performance is certainly not indicative of future performance over any time frame.

Of course, we should note that going back further over the last five years, TDOC is still significantly outperforming both HCA and UNH.  In fact, TDOC is a 10-bagger over the last five years with a gain of 1,183%, while HCA and UNH have also performed well but are only up 169% and 206%, respectively.

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