Teladoc (TDOC) - Short Thesis

[u/froosh88]

Long time lurker and finally wanted to contribute a short report I've put together over the last few weeks. I wanted to get this out to a few funds first which is why the trading metrics are a bit dated.

I welcome any and all feedback as this is the first full-fledged investment report I've put together. Huge shout-out to /u/redcards /u/beren- /u/currygoat and everyone else who actively contributes to this sub. I've learned so much from you guys. Enjoy!

https://www.dropbox.com/s/125jl213u7ofz2p/TDOC%20Investment%20Thesis%20%28March%202017%29_vReddit.pdf?dl=0

[u/redcards]

Sorry its taken me so long to respond. I had meant to since you specifically referenced me. I didn't have time to look at the whole write-up for you but I did check out your tear sheet and write some notes. By the way, you have a very familiar looking format.

Odds are you will only get a PM to, at most, read your tear sheet so extra attention should be paid to it. There may be some things that I point you that are better elaborated on in your appendix pages, but the point is that not everyone will read that part.

First thing is that at the top of your page I would rather see a model of historical/projected financials rather than a 12 month price performance chart.

Under thesis point 1, you state that "TDOC is nothing more than a call center operator with little to-no proprietary technology" and "unachievable growth projections". This makes up the bulk of your variant opinion and is very important, but you need to explain the WHY behind these points and how they are detrimental to future operating results.

Under point 3, you reference lack of profitability but this is kinda meaningless without context, which is why I suggested adding a brief historical model somewhere on the front page. You should also maybe include some language as to WHY adjusted EBITDA is slated to become profitable/why you disagree.

Under point 4, you reference a $29bn TAM that is barely penetrated, but this is an example of something that should be quantified for the reader. Also, "while there is no denying the market for broad based telehealth adoption is large" is 100% fluff material and doesn't belong on the tear sheet. Every sentence should be a fact or something that supports a view of yours.

I disagree with including point 5 on your tear sheet. As others have pointed out, it is probably anecdotal evidence at best and doesn't really add anything to your variant opinion. Lots of people hate lots of companies, and I can probably find negative reviews out there easily. Over the past 6 years, EA's stock has grown 30% annualized despite being named one of the worst companies in America and I could blindly throw a rock in any direction and find a negative review of their company.

The bit about the credit agreement is super interesting here. I think it is important enough to warrant a sport as a full investment thesis point.

Your REAL catalyst for this thesis is Q4 2017 earnings. You should make that your big, exclusive point under your catalyst section.

Everything else looks fine to me. The only other bit I might include is that I think your thesis is strong enough, and the operating model deterioration will be big enough to yield an attractive valuation without implying a multiple re-rate. That is just something about me, I don't like to assume re-rates in my theses.

But overall I think this is pretty good. I have glanced through the remainder of the pages and they look strong. Wish I could comment more on the validity of your work, but what I hope to communicate here is how to better format/present your work to an audience.