Cathie Wood’s favorite Teladoc set for worst day on record after slashing profit target

NEW YORK: Teladoc Health Inc, which counts Cathie Wood’s Ark Invest as its biggest investor, tanked more than 45% on Thursday after the company slashed its full-year earnings forecast, dealing another blow to her flagship fund reeling from a slide in growth stocks.

The pandemic darling’s stock, which hit an all-time high a year ago on a surge in demand for virtual healthcare services, touched its lowest level in more than four years in early trading and was heading for its worst day ever.

ARK Invest’s flagship Innovation ETF, which holds $631 million worth of Teladoc shares, its third-biggest holding, slipped 2.7% on Thursday. The fund, consisting of rate-sensitive hyper-growth stocks that have taken a beating amid prospects of rising rates, has nearly halved in value this year.

Higher advertising spending at Teladoc’s mental health segment and longer sales cycle for chronic care segment weighed on the largest US telehealth company’s first-quarter results.

Teladoc, which owns online therapy service BetterHelp, lowered its full-year adjusted EBITDA outlook to $240 million to$265 million, from $330 million to $355 million. It also reduced its revenue forecast to a range of $2.40 billion to $2.50 billion, from $2.55 billion to $2.65 billion.

The company reported first-quarter adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $54.5 million, a decline of 4% from a year ago. Revenue rose 25% to $565 million in the same period.

The top ten holdings at the ARKK fund including Zoom Video Communications, Roku Inc and Coinbase are down in the range of 50% to 76% in the past 12 months, barring Tesla Inc. Tesla shares have risen 25% over the past year.