DXCM, a broken stock?
The stock is down 40% for three main reasons:
Market Share Loss to Competitors: The company lost significant market share to
ABT in the Medical Device Channel (MDC), contributing about $100 million to the guide down.
Slower New Patient Growth: There was a noticeable slowdown in new patient uptake, adding $125 million to the projected loss. Although the company is seeing some improvements, the market remains cautious.
Faster Than Expected Rebates: Rebates from Medicare occurred faster than anticipated, resulting in lower prices for adopters sooner than expected, accounting for a $75 million decrease in guidance.
Dexcom (DXCM) has caught my interest due to its recent significant price action. After a 40% gap down, which occurred overnight in after-hours and pre-market trading, the daily chart now shows a promising setup. The earnings release led to a small spinning top candle, not exceeding the daily ATR, contrary to what many traders might have anticipated. The stock closed with an impressive relative volume of 10.07, setting a key support level at $62.34 where sellers failed to push the price lower.
This scenario is a classic opportunity for hedge funds looking for long-only trades, as the stock has lost 40% of its valuation overnight, presenting a potentially low-risk buying opportunity. I plan to swing trade DXCM next week, ideally waiting for any further liquidity sweeps to the downside to be quickly bought up, such as a wick down to $63 or a break below the prior day's low of $62.34, only to be bought up again. This would trigger my entry, either before close or at the next open, with a stop loss at the daily pivot low. This trade requires patience and courage, as the stock is displaying signs of capitulatory price action, but not sheer panic.
The potential for a reversal is strong given the exaggerated sell-off and the significant volume indicating substantial interest at these levels.
Market Share Loss to Competitors: The company lost significant market share to
ABT in the Medical Device Channel (MDC), contributing about $100 million to the guide down.Slower New Patient Growth: There was a noticeable slowdown in new patient uptake, adding $125 million to the projected loss. Although the company is seeing some improvements, the market remains cautious.
Faster Than Expected Rebates: Rebates from Medicare occurred faster than anticipated, resulting in lower prices for adopters sooner than expected, accounting for a $75 million decrease in guidance.
Dexcom (DXCM) has caught my interest due to its recent significant price action. After a 40% gap down, which occurred overnight in after-hours and pre-market trading, the daily chart now shows a promising setup. The earnings release led to a small spinning top candle, not exceeding the daily ATR, contrary to what many traders might have anticipated. The stock closed with an impressive relative volume of 10.07, setting a key support level at $62.34 where sellers failed to push the price lower.
This scenario is a classic opportunity for hedge funds looking for long-only trades, as the stock has lost 40% of its valuation overnight, presenting a potentially low-risk buying opportunity. I plan to swing trade DXCM next week, ideally waiting for any further liquidity sweeps to the downside to be quickly bought up, such as a wick down to $63 or a break below the prior day's low of $62.34, only to be bought up again. This would trigger my entry, either before close or at the next open, with a stop loss at the daily pivot low. This trade requires patience and courage, as the stock is displaying signs of capitulatory price action, but not sheer panic.
The potential for a reversal is strong given the exaggerated sell-off and the significant volume indicating substantial interest at these levels.
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