What happened

Shares of Co-Diagnostics (NASDAQ:CODX) were 22.8% lower as of 10:55 a.m. EDT on Friday. The big drop came after the molecular diagnostics company announced its second-quarter results following the market close on Thursday.

Co-Diagnostics reported revenue in Q2 of $24 million and net income of $12.6 million, or $0.46 per diluted share. While those results reflected significant improvement over the prior-year period, they fell far short of what analysts were expecting. The consensus analysts' estimate projected revenue of $26.5 million and earnings of $0.59 per share.

So what

Does it really matter that Co-Diagnostics badly missed analysts' estimates? Yes and no.

Hand holding magnifying glass with stock chart and coronavirus in the background

Image source: Getty Images.

Any quarterly results are only a snapshot of a company's performance. It's much more important for investors to focus on the long term. From this perspective, Co-Diagnostics' Q2 revenue and earnings disappointments aren't anything to get worked up about.

On the other hand, Co-Diagnostics has been a high-flying growth stock this year thanks to demand for its COVID-19 diagnostics tests. Prior to the plunge on Friday, the stock had skyrocketed more than 2,000% year to date. This kind of sizzling performance requires meeting and exceeding ever-rising expectations, which Co-Diagnostics failed to do in the second quarter.

Now what

There's a reasonably good chance that the stock could rebound from its pullback. Demand for the company's COVID-19 tests isn't likely to decline. Co-Diagnostics hopes to deploy new flu and COVID-19 test panels during the third quarter.

Its partner, Clinical Reference Laboratory, also received Food and Drug Administration Emergency Use Authorization for a saliva-based COVID-19 test that can be taken at home. This test uses Co-Diagnostics' Logix Smart and CoPrimer technology. This saliva-based test could boost sales in the second half of 2020.

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