What happened

Shares of Quidel (NASDAQ:QDEL) fell on Monday, continuing declines from last week. It seems the market was selling companies like Quidel that have grown revenue because of the COVID-19 pandemic. That might explain why the stock fell 10% today.

So what

Quidel fell last week after reporting full-year 2020 results. Counterintuitive to the drop, the company's results were quite good. Revenue in 2020 rose to $1.66 billion, up 211% from revenue in 2019. Its rapid tests for COVID-19 obviously were in high demand for much of the year, leading to the outsize growth. 

A rising red arrows breaks near the top, resulting in the tip of the arrow pointing down.

Image source: Getty Images.

While results were hot and even exceeded what Wall Street analysts were looking for, it didn't seem to matter. Investors are starting to get jittery with stocks like these now that there's a vaccine and coronavirus cases are on the decline in many states. 

Now what

There's more to Quidel's business than COVID-19 testing. Furthermore, there is some reason to believe testing could continue well into the future. For example, some researchers are beginning to say that COVID-19 could become endemic -- in other words, it will continue to circulate and not be eradicated. This forecast suggests that people will at least keep getting tested with Quidel in the coming year, if not beyond.

To me, this is a reminder of why it's great to have a diversified portfolio. There may be a lot of uncertainty in the near term for Quidel, but if your investing dollars are spread around to a lot of companies, it allows you to take on this perceived risk with less consequence should the company struggle. And holding allows you to profit if Quidel keep producing stellar results like it has in recent months.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.