It's no surprise that the "uber for doctors" had a hit IPO - pricing above-the-range at $19 and opening at $29.

Our IV estimate of $11 is far less exciting though. Why so low? The model itself is below but the key obstacles are just good (not stellar) revenue growth and low operating margins for some years to come. (Management is targeting break-even in 2017.) To buy stock at $30 an investor needs a two-year time horizon to get a 20% return and has at least 50% downside risk in the medium-term. Hence the overall risk/reward isn't great at $30.

TDOC enjoys some "scarcity value" as a stock investors can own to play what is clearly a big trend in a giant industry. Even at this lofty valuation the market capitalization of TDOC is only $1.1B. It can be said that the ratio of market value to market opportunity remains very small indeed. One can get into trouble applying this type of investment logic however.

Healthcare Players from CB Insights

Fundamentally the story is strong as presented but it's still early in the game. The diagram below (From CB Insights) shows how competitive the space will be. Our primary concern is that Teladoc will end up positioned as a lower-end provider with lower quality doctors and poorer, less happy patients.

Nobody doubts the trends, the enormous market size or the opportunities to develop winning scenarios that benefits patients, doctors and insurance companies - but the ultimate positioning of Teladoc in the space has yet to be determined and the current valuation prices in quite a bit of future success already.

We'll be following Teladoc and it will probably have a position in the IPO Candy Folio - maybe at a better price or a later time.