Tech Stocks Are Down, Here’s Why.
Tech stocks have been the star of the market in the last two decades. With the ongoing coronavirus pandemic, the technology industry has been firing on all cylinders and had their best quarterly performance in the 21st century. In fact, top tech stocks were trading higher on Tuesday morning, hoping for the possibility of capital-gains tax cuts. But President Trump then decided against such a move, saying it did too little for the middle-class. As a result, we saw tech stocks tanked immediately. The casualties include Apple (AAPL Stock Report), Microsoft (MSFT Stock Report) and Netflix (NFLX Stock Report), just to name a few. And they didn’t see their stock price recover after midday trading.
Another major reason all top tech stocks are taking a back-seat is that investors decided to put their money into those neglected sectors that suffered the most during the pandemic. Financial, industrials and consumer stocks are all seeing an uptick in their stock prices. Yes, I get that getting back to normalcy is what everyone has been anticipating following the global health crisis. But is it anytime soon? That’s the million dollar question.
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Tech Stocks Are Still Strong Despite The Recent Dips
The pandemic will have a lasting effect on how the world is going to operate in the near to medium term. Digital economy, social distancing and environmental sustainability are what will hold the world steadily without letting it fall further apart. Environmental sustainability is what every global leader should strive for as it might help us avoid another round of pandemic. Starting with green energy, the electric vehicle manufacturer, Tesla (TSLA Stock Report), recently just announced a 5 to 1 stock split. The news immediately sent TSLA stock soaring.
But of course, we are not talking about EV stocks today. Another trend which came up in the new normal is telemedicine, without a doubt. And the poster child is Teladoc (TDOC Stock Report) hands down. Here’s why Teladoc could help the world digitize our healthcare and help curb the spread of the virus simultaneously.
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The Largest Virtual Healthcare Provider: Teladoc
Teladoc has acquired Livongo (LVGO Stock Report), creating one of the largest virtual healthcare providers. For investors who are new to this company, Teladoc is the largest telemedicine company in the US. Essentially, what the company does is basically providing consultation through virtual calls directly with a doctor, at a fraction of the price.
In fact, telehealth is not something new, this service has been available in the past few years. But it is only gaining strong traction during the coronavirus pandemic.
Since many states in the U.S. have reopened, Teladoc’s growth rate will simply decline because it’s impossible to keep a high growth rate indefinitely. Of course, the pandemic is still far from over, and cases are still ballooning in the US. This suggests there might still be some tailwinds left to Teladoc.
Strategic Acquisitions Make TDOC Stock A Buy For The Long Term
Investors are worried that over the long term, people will go back to visit their doctors in person, and that’s expected. But the strategic acquisition of InTouch Health allows Teladoc to take advantage of their existing hospital networks. By expanding its reach and potentially creating more opportunities, this would allow Teladoc to keep their sales growth level to a healthy level. In addition, the latest acquisition of Livongo Health also created a new avenue for patients to monitor their own glucose level, Livongo has enrolled more than 410,000 diabetes patients in their system, and Teladoc is poised to benefit.
A commanding lead in a rapidly growing niche makes this a great stock to buy the next time the stock market dips. The long term prospects of telemedicine remain favourable. With more users, regulations will adapt to take advantage of the technology. More consumers have also been trying it out due to COVID-19. And it seems Teladoc, after the acquisition of Livongo, will continue to benefit as the top dog in the arena.
