DexCom: High Growth, Intense Competition, Extreme Valuation

About a year ago I published my last article on Dexcom (DXCM) and claimed that the company’s fundamental business had no connection to the stock price any more. Back then, the stock was trading for $100 and I assigned the stock a bearish rating. About one year later, the stock gained 43% - greatly outperforming the S&P 500 and mocking my bearish rating. But I remain bearish on the stock and still see the risk of a huge decline in the next few quarters. In the following article, I will look at the business and some fundamental numbers, at the challenge to correctly estimate the market potential, at the competition and the valuation of the stock.

Dexcom is a medical device company, that is selling a continuous glucose monitoring system. If you like to know more about Dexcom and get a detailed description you might read my article “Dexcom: Spearhead of a new disruptive technology in diabetes”. And I especially like to draw your attention to my article “Continuous Glucose Monitoring Systems – A growing market”. The article is from 2016 and is in some aspects outdated, but offers a good overview about glucose measurement and CGM systems (the article is an Author’s Pick so you can read it for free).

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