On Friday, July 22, Teladoc Health Inc (NYSE: TDOC), the leader in US telemedicine, lost almost 6% due to an emotional reaction to the news. That day, TDOC stock ended trading at $41.18. At the same time, growth over the past month amounted to more than 25%.
The reason for the sharp decline in quotes was the news that e-commerce and cloud computing giant Amazon is acquiring primary care operator 1life Healthcare for $3.5 billion. The company, known for its One Medical brand, operates healthcare facilities in 12 major US markets.
In addition, it provides virtual care and telemedicine services. Investors are likely to assume that through this acquisition, Amazon will gain access to telemedicine platforms and could become a serious competitor to TDOC.
Moreover, Amazon has repeatedly stated that it is interested in entering the healthcare market and is ready to contribute to the modernization of this industry.
Is such a strong negative reaction to this news justified? It is most likely emotional, as there is no concrete information yet on how exactly Amazon plans to use its acquisition. In addition, it was obvious that Teladoc Health Inc (TDOC) would not remain a monopoly, and the emergence of strong competitors was only a matter of time.
Today, Teladoc Health’s value lies in its well-built telemedicine delivery system, which allows it to maintain its leadership position and be a pioneer in delivering medical services at a distance.
Amazon’s entry into the telemedicine market, in contrast, could create positive momentum for the entire industry. Using its influence, the leader of e-commerce will be able to generally increase interest and trust in telemedicine and attract a large audience to new services. In this case, Teladoc Health Inc (TDOC) will also become the beneficiary of the development of the direction.
TDOC stock rose 1.48 percent for the week and 25.66 percent for the month. Its quarterly price performance was -30.26 percent, while its 12-month trailing performance was -73.06 percent.