Dexcom (NASDAQ:DXCM) stock is down over 40% after reporting disappointing revenue for the second quarter.
It also lowered guidance for the rest of the year.
The problem lies with its Stelo continuous glucose monitor. The company is delaying the device’s launch as it builds inventory.
Dexcom earned $143.5 million, 35 cents per share fully diluted, on revenue of $1 billion. But it guided toward slower growth, just 1% to 3% for the third quarter, and 11% to 13% for the year.
DXCM stock opened this morning at about $65 per share after selling for $107 early on July 25. The market capitalization fell from $43 billion to $27 billion.
The Big Miss
Dexcom monitors are worn on the back of the arm. They deliver data to the Apple (NASDAQ:AAPL) Watch or other devices via Bluetooth. Singer Nick Jonas is its paid spokesman.
Dexcom traded at nearly $140 per share in April after the Food and Drug Administration (FDA) approved over-the-counter sales of Stelo. Stelo works for 15 days and was due for release this summer.
Stelo is designed for Type 2 diabetics who are not taking insulin. Sayer said in June the company hoped to have “boatloads” of inventory available before the product launch, but a Web page on Stelo still says it is “coming soon.” In the earnings release, Sayer said, “Our execution did not meet our high standards.”
Dexcom stock fell despite missing analyst revenue estimates by just $36 million, while earnings were 4 cents per share better than expected. The share price also crashed despite a new $750 million stock buyback program.
At its July 26 opening price, DXCM stock is selling for about 7 times revenue and 48 times estimated 2024 earnings.
DXCM Stock: What Happens Next?
Stelo faces an uncertain future thanks to the rise of GLP-1 drugs like Wegovy and a competing device from Abbott Laboratories (NYSE:ABT) called Libre Rio.
As of this writing, Dana Blankenhorn had a LONG position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
