Whatever you think about Tesla (NASDAQ: TSLA), there is no doubt that the electric vehicle (EV) pioneer has had a remarkable year. Its shares have skyrocketed by more than 660%. The company generated record sales and profits. Tesla was even selected to be added to the S&P 500 table of contents.
So certainly, Tesla deserves some big compliments. But there is one other hot stock that’s delivering revenue growth that blows Tesla away. It’s also a lot smaller than the EV giant. This stock has received a lot of attention from investors this year, although not nearly to the extent that Tesla has. What is this mysterious stock? None other than a leading telecare provider Teladoc Health (NYSE: TDOC).
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Faster than a fast-moving Model S.
While Tesla is selling more of its cars than ever before, Teladoc’s sales growth is simply no candle. The following chart compares the sales growth of the two companies over a 12-month period. Tesla’s growth rate is good, but Teladoc sales are zooming faster than a fast-moving Model S.
TSLA Revenue (TTM) data by YCharts
Why is Teladoc’s revenue growing nearly four times faster than Tesla’s? The credit goes mainly to the COVID-19 pandemic.
Shelter orders in much of the US earlier this year sparked an increase in tele-health visits. During the first nine months of 2020, Teladoc’s total visits increased 163% to 7.6 million.
However, don’t think for a second that Teladoc’s momentum is running out. Actually, the company is experiencing accelerated growth. Teladoc reported that total visits more than tripled in the third quarter, driving revenue up 109% year over year.
Tesla also had a great third quarter, but its 42% year-over-year revenue growth still lagged far behind Teladoc’s performance.
Different lanes
Some may object to the idea of comparing Teladoc to Tesla. After all, the companies operate in completely different lanes. The electric vehicle sector is not like the telecare sector. True, but every stock competes in some sense with every other stock for investors’ hard-earned money.
Tesla is now clearly winning the race against Teladoc. Stock is up nearly five times more than Teladoc’s stock in 2020.
It certainly does not detract from Tesla’s appeal to investors that the company is already profitable. Despite the huge sales increase this year, Teladoc still has not achieved profitability.
There is also likely a perception gap about the post-pandemic potential for any business. Tesla could receive a boost as concerns about COVID-19 fade and people have more money to spend on cars. The upcoming Biden government’s focus on climate change could also help push consumers towards Tesla’s electric vehicles and sunroofs. On the other hand, some are concerned that the end of the pandemic could slow Teladoc’s growth as patients return personally to healthcare professionals.
Electric opportunity
I think concerns about Teladoc in a post-pandemic world are misplaced. Surveys show that most Americans like to use telecare and want that option even after the coronavirus crisis is over.
Thanks to the recent acquisition of Livongo Health, Teladoc should now be even more attractive to business customers. Livongo’s digital health platform to help patients manage chronic conditions such as diabetes and hypertension is a perfect fit with Teladoc’s core telecare services.
Teladoc estimates that its total addressable market now stands at $ 120 billion per year in the US alone. The company currently has a market share of less than 1%. The healthcare database has enormous potential as virtual healthcare, including telecare and remote disease management, is accepted.
Tesla’s accolades are well-deserved, but I think Teladoc Health, with its faster growing revenues and much smaller market cap, also has an electric opportunity ahead.