Please ensure Javascript is enabled for purposes of website accessibility

Why DexCom Stock Is Getting Trounced Today

By George Budwell - Mar 16, 2020 at 11:35AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

DexCom's stock can't escape the immense gravity of the market-wide sell-off today.

What happened

Shares of the diabetes-oriented medical device maker DexCom (DXCM -10.41%) are tanking in lockstep with the broader market today. Specifically, DexCom's stock was down by an eye-catching 13.8% as of 10:37 a.m. EDT Monday morning.

DexCom, along with most other U.S. stocks, is reacting negatively to both the Federal Reserve's emergency rate cut over the weekend and the fallout resulting from the continued spread of COVID-19 across the globe. The bottom line is that the global economy appears headed for a prolonged rough patch. In turn, investors are selling off stocks this morning, presumably in favor of cold hard cash.  

A doctor holding a sign with the word "diabetes."

Image source: Getty Images.

So what

DexCom was one of the hottest growth stocks in the entire healthcare sector prior to this dramatic sell-off. Fueled by skyrocketing sales of its G6 continuous glucose monitoring (CGM) system, the company's shares were up by nearly 90% year-over-year at the start of March. As such, DexCom's stock might be getting singled out for particularly harsh punishment today. In brief, the company's shares were trading at an astronomical 94 times next year's projected earnings at one point earlier this month, thanks to its meteoric rise over the course of 2019 to early 2020.   

Now what

Should bargain hunters take advantage of today's weakness? The short answer is no. DexCom's game-changing CGM system has been selling like hot cakes, but a noteworthy portion of this growth has been coming from international markets in recent quarters. Unfortunately, there's no way to predict how COVID-19 will impact the sales of medical devices abroad. Thus, it might be best to watch this falling knife from the safety of the sidelines for the time being.  

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

DexCom, Inc. Stock Quote
DexCom, Inc.
$290.19 (-10.41%) $-33.73

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.