Market Movers: Teladoc Shares Get Hospitalized

Market Movers: Teladoc Shares Get Hospitalized

Happy Saturday folks!

Many of the stock market’s big hitters were reporting earnings this week, which meant our team was certainly kept on its toes trying to cover all of the ups and downs.

Elon Musk and Twitter dominated the headlines at the beginning of the week, but surprisingly, the now board-accepted offer to take the social media platform private hasn’t led to it featuring in our Weekly Movers.

Instead, earnings mania has taken over. Wall Street has been as reactionary as ever, with every revenue beat or miss being scrutinized as the market remains generally uncertain.

With that in mind, let’s see what stocks made big moves this week.

Here were the biggest movers in the MyWallSt shortlist this week:

Moving Up ⬆️

Facebook (FB) +11.7%

RH (RH) +10.3%

Lemonade (LMND) +10.1%

Datadog (DDOG) +8.5%

Salesforce (CRM) +8.3%

Moving Down ⬇️

Teladoc (TDOC) -42.5%

Align Technology (ALGN) -15.5%

Tesla Motors (TSLA) -12.7%

Take-Two Interactive (TTWO) -9.7%

Peloton Interactive (PTON) -9.4%

The Winners

Facebook (FB) +11.7%

Let’s start off with some good news, shall we? Meta saw its shares spike on Thursday following its latest quarterly earnings call. The Big Tech firm rebounded from its disastrous February reports which saw the company lose 26% of its value in the largest single-day loss in the history of the stock market.

A beat on earnings and a miss on revenue is rarely enough to warrant any kind of an uptick, but shareholders just seemed happy to see Meta back on track. As CEO Mark Zuckerberg himself put it: 

“We made progress this quarter across a number of key company priorities and we remain confident in the long-term opportunities and growth that our product roadmap will unlock.”

Electric as always from Meta’s founder and CEO. It goes to show, however, that February’s wholesale sell-off was massively reactionary and that it was far from a true representation of Meta’s actual value. Years of work and innovation don’t disappear in a single quarter — something to keep in your mind for the rest of earnings season.

RH (RH) +10.3%

“Who is furnishing their home in this macroeconomic environment?!?” I hear you gasp into your morning coffee, as you notice Restoration Hardware’s 10% jump this week. 

Well, probably nobody right now, between inflation, impending recession, ubiquitous “supply chain issues”, and overall misery surrounding the conflict in Europe. What RH does have going for it though is speculation surrounding its upcoming 3-for-1 stock split. 

Though no date has been confirmed for the stock split, investors are clearly getting excited, especially as April closes out and the action is meant to take place in Q2. Perhaps next week is the week? Perhaps not…

Either way, investors may need to familiarise themselves with the fact that stock splits in no way change the inherent value of an investment, they simply create more shares. When a stock splits, the share price goes down and the number of shares goes up. If RH splits 3-for-1, 300 shares at $353 (last closing price) become 900 shares at roughly $117.70 each. Splits used to make stocks more liquid and more affordable to everyday investors, but that was before fractional ownership. Try not to get sucked into the hype. 

The Losers

Teladoc (TDOC) -42.5%

Grab onto your hats folks, because this one is a doozy. Shares in Teladoc tanked on Thursday following its Q1 2022 report. The culprit? An absolutely massive loss for the quarter of $41.48 per share. As a comparison, Wall Street analysts had only been expecting a loss per share of $0.60. Somebody call a virtual doctor.

The main reason behind this huge loss — which totaled $6.7 billion for the quarter — was a non-cash goodwill impairment charge. As our Chief Investor, Emmet, explained:

“What is an impairment charge? It’s a process used by businesses to write off worthless goodwill, and in this case, it relates to Teladoc’s acquisition of Livongo in 2020. What happens is that there is a difference in the purchase price and current book value, which is fancy-speak for saying that they overpaid. Management has a degree of discretion as to when they tell the world about this, and in Teladoc's case, that was clearly last night.”

All is not lost for Teladoc though. I’ll let Emmet explain once again:

“A year ago, loss was $200 million. If we ignore the non-trivial but non-cash impairment, loss was about $100 million. That, to me, looks like an improving business model.”

While a loss that big definitely hits shareholders hard, it doesn’t necessarily spell the end for Teladoc. If you still believe that telehealth is the future and that Teladoc is the company to lead the way, then the smartest thing to do might be nothing at all.

Tesla Motors (TSLA) -12.7%

While Elon Musk has his eyes firmly set on “bringing free speech to Twitter”, he’s neglected to notice that the company that, arguably, made him who he is, is falling this week.

Shares in Tesla floundered off the back of Musk’s bid to buy Twitter, not only because the ownership of yet another business will divert even more of Musk’s time, but also because of the large amount of debt that comes with Twitter — upwards of $1 billion a year.

What’s more, Musk really twisted the knife on Thursday by unveiling that he had dumped more than $4 billion worth of Tesla shares in order to fund the $44 billion Twitter bid. The cult-like worship of Musk’s EV empire can make for volatile prices, and the longer this Twitter bid draws out, the choppier the waters are going to be. 

Perhaps it’s time for ol’ Elon to check in on his actual children before eyeing up the next one.

Pádraig BolgerPádraig Bolger