HomeInvesting NewsWhy Shares of Teladoc Health Are Soaring Today

Why Shares of Teladoc Health Are Soaring Today

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Brief Summary

  • Amazon has decided to end its telehealth program, Amazon Care.
  • This is good news for Teladoc Health because it reduces the company’s level of competition.
  • This decision confirms that Teladoc’s moat is broader and deeper than previously believed.

Teladoc Health (NYSE:TDOC)

After a morning high of 4.8%, Teladoc Health (NYSE:TDOC) shares are up 2.2% as of 10:53 a.m. ET on Thursday. This increase was precipitated by the announcement that Amazon Care, Amazon’s competing telehealth program, will be discontinued by the end of 2022.

The lengthy consideration that led to the decision to shut down Amazon Care was detailed in a memo written by Neil Lindsay, who heads up Amazon Health Services. As Lindsay said, the company “decided that Amazon Care isn’t the ideal long-term answer for our commercial customers.” He said it “wasn’t a complete enough solution for the huge enterprise customers we have been targeting” and hence wouldn’t be sustainable in the long run.

What’s the Reason?

Competition is one of the main complaints leveled against Teladoc Health (NYSE:TDOC). Critics have pointed to Amazon’s entry into the telehealth business with the 2021 statewide launch of Amazon Care as an example.

However, the recent decision by Amazon to end Amazon Care demonstrates that Teladoc Health’s (NYSE:TDOC) market position is more significant than previously thought. The scope of the company’s virtual care services is extensive. The company counts more than half of the Fortune 500 among its clientele.

What Should You Do Now?

Teladoc Health (NYSE:TDOC) stock won’t explode just because Amazon Care is going under. In addition to its decreasing growth, the telehealth stock faces other hurdles.

However, investors have every reason to notice when a major player like Amazon gives up instead of trying to compete head-on with Teladoc Health (NYSE:TDOC). The market leader in virtual healthcare is constantly adding new services. It’s possible that this would boost its ability to compete.

If Teladoc Health (NYSE:TDOC) wants to make a comeback, it has, above all else, to speed up its expansion. The possibility exists that Amazon’s choice will increase the likelihood of this occurring.

Featured Image:  Megapixl @Rafaelhenriquepress

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