Why DexCom Inc. Shares Briefly Swooned

DexCom shares temporarily dove after the company reported its first-quarter earnings results. Find out whether this dip is a buying opportunity for investors.

May 2, 2014 at 2:06PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of DexCom (NASDAQ:DXCM), a developer of continuous glucose monitoring systems, tumbled as much as 14% after reporting its first-quarter earnings results after the closing bell last night. Shares have since recovered nearly all of their losses and are trading around the flat line as of this writing.

So what: For the quarter, DexCom reported robust product revenue growth of 68% to $46.7 million as total revenue jumped to $47.1 million, a 59% increase from the prior year period. Despite its revenue growth, net loss widened to $12.5 million, or $0.17 per share, from $11.1 million or $0.16 during this quarter last year. By comparison, Wall Street was anticipating just $44.1 million in sales, but a narrower loss of $0.11 per share. The primary culprit was a 54% increase in total operating expenses tied to the launch of new monitoring systems and higher research and development costs.

Now what: DexCom continues to look like a winner on paper with close to 26 million people in this country having diabetes. Logically, any company that offers glucose monitoring devices should be a long-term success story. While we've witnessed DexCom's revenue soar in recent years, I'm personally still waiting for its bottom line to catch up with its monstrous share-price appreciation. With losses ongoing and the company valued at more than 100 times next year's profit projections, I'd suggest investors stick to the sidelines and wait for DexCom's valuation to dip considerably, or its profits to soar, before even attempting to dip their toes in the water.

DexCom shares have soared in recent years, but even it could struggle to keep pace with this top stock over the long run
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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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