Are These Beaten-Down Stocks Generational Opportunities or Value Traps?

Some stocks saw massive surges during the early pandemic years because their businesses were well-positioned to perform well in that environment. Many of them have given back those gains, and then some, since then. Two corporations that fit this description are Teladoc Health (NYSE: TDOC) and PayPal (NASDAQ: PYPL). Both companies are down by more than 80% over the past five years. If they can recover, Teladoc and PayPal may offer patient investors who purchase their shares at current levels outstanding returns over the long run, making them potential generational buying opportunities. However, their shares could continue sinking if they fail to address their challenges. Should investors take a chance on Teladoc, PayPal, or both?

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1. Teladoc Health

Teladoc is a telemedicine specialist. Patients can get basic consultations with doctors from the comfort of their homes through its platform, along with prescriptions and referrals. In some cases, that gets the job done without patients needing to see doctors in person, which saves everyone involved time and money. Teladoc has established itself as a notable player. The company's ecosystem featured more than 100 million members as of the end of 2025.

Why, then, has Teladoc significantly lagged the market in recent years? Here are two reasons. First, the company encountered significant competition. Between other telehealth companies seeking to eat Teladoc's lunch, major corporations with deep existing ecosystems developing their own dedicated virtual conference platforms for telemedicine visits, and a shift back to in-person care, the company's total visits haven't grown much in recent years.

Teladoc Health has faced particular challenges in the virtual therapy niche where it competes through BetterHelp. Once its most important growth drivers, BetterHelp's memberships and revenue have been declining.

Second, Teladoc Health has remained unprofitable, partly due to high customer acquisition costs and the impact of acquisitions on its bottom line. Can Teladoc turn things around? The company has been expanding internationally while seeking third-party coverage for BetterHelp, which could help increase the service's appeal. However, Teladoc has had little success with that goal. Meanwhile, even though international revenue is growing at a good clip, investors should consider the possibility that Teladoc will, eventually, face the same challenges abroad. In my view, the stock is unlikely to recover anytime soon. It's best to stay away.

2. PayPal

The popularity of e-commerce -- which requires digital payment methods -- soared during the pandemic. That allowed PayPal to post some of its best quarters ever. However, once things cooled down, the company's active accounts growth stalled, as did revenue and earnings growth. That said, I remain bullish on PayPal's future. Here are three reasons why. First, the company has developed a brand name and remains a trusted player in its niche of the fintech industry. That could be particularly important as the market continues to grow.

Second, PayPal has arguably built a strong competitive edge thanks to network effects. The company ended 2025 with 439 million active accounts (up 1.1% year over year in the fourth quarter), along with a massive total payment volume of $1.79 trillion for the year, up 7% from 2024.

PayPal's large payment volume and significant adoption among both businesses and consumers attract more players on both sides of the commerce equation. Third, PayPal has attractive growth opportunities ahead. One of the most exciting is its push into digital advertising. PayPal has a massive amount of data on consumer shopping habits and preferences at its disposal to help companies craft highly targeted ads. This high-margin opportunity could help boost the company's revenue and earnings in the long run, even if it takes a little while for PayPal to scale this business. So, PayPal remains a top stock to buy and hold, especially at current levels.

Prosper Junior Bakiny has positions in PayPal. The Motley Fool has positions in and recommends PayPal and Teladoc Health. The Motley Fool recommends the following options: short June 2026 $50 calls on PayPal. The Motley Fool has a disclosure policy.