DexCom Stock Tumbled 23% – Opportunity or Trap?
DexCom (DXCM) stock has fallen by 22.6% in less than a month, from $71.06 on 23rd Oct, 2025 to $55.00 now. Should you buy this dip? Dip buying is a viable strategy for quality stocks that have a history of recovering from dips.
Dip buying is a viable strategy for quality stocks that have a history of recovering from dips. As it turns out, DXCM stock passes basic quality checks. Historically, the median return for the 12-month period following sharp dips was 49% , with median peak return reaching 51%. We define sharp dip as stock going down 30% or more, in less than 30 day period.
Individual stocks can be volatile and shake you out, but strategic allocation and diversification helps you stay invested. Our Boston-based, wealth management partner’s asset allocation approach is designed exactly for that.
Historical Median Returns Post Dips
| Period | Past Median Return |
|---|---|
| 1M | 6.2% |
| 3M | 23.6% |
| 6M | 37.2% |
| 12M | 48.6% |
Historical Dip-Wise Details
DXCM had 9 events since 1/1/2010 where the dip threshold of -30% within 30 days was triggered
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- 51% median peak return within 1 year of dip event
- 330 days is the median time to peak return after a dip event
- -8.5% median max drawdown within 1 year of dip event
| 30 Day Dip | DXCM Subsequent Performance | |||||||
|---|---|---|---|---|---|---|---|---|
| Date | DXCM | SPY | 1Y | Peak Return |
Max Drop |
# Days to Peak |
||
| Median | 49% | 51% | -9% | 330 | ||||
| 4032025 | -31% | -12% | -6% | 45% | -6% | 116 | ||
| 7262024 | -45% | 1% | 26% | 42% | -7% | 213 | ||
| 5092022 | -31% | -12% | 49% | 51% | -18% | 352 | ||
| 9282017 | -38% | 2% | 215% | 223% | -2% | 348 | ||
| 11022016 | -33% | -3% | -24% | 36% | -29% | 76 | ||
| 2082016 | -34% | -10% | 49% | 79% | -1% | 213 | ||
| 4302014 | -32% | 1% | 108% | 118% | -9% | 358 | ||
| 11032011 | -34% | 12% | 65% | 91% | -12% | 330 | ||
| 8102011 | -30% | -13% | 20% | 27% | -33% | 336 | ||
DexCom Passes Basic Financial Quality Checks
Revenue growth, profitability, cash flow, and balance sheet strength need to be evaluated to reduce the risk of a dip being the sign of a deteriorating business situation.
| Quality Metrics | Value | Quality Check |
|---|---|---|
| Revenue Growth (LTM) | 9.3% | Pass |
| Revenue Growth (3-Yr Avg) | 17.3% | Pass |
| Operating Cash Flow Margin (LTM) | 23.0% | Pass |
| Leverage (see below) | – | Pass |
| => Interest Coverage Ratio | 42.3 | |
| => Cash To Interest Expense Ratio | 154.2 |
Dip buying, while attractive, needs to be evaluated carefully from multiple angles. Such multi-factor analysis is exactly how we construct the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 — the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.