Core Viewpoint - DexCom's stock has declined by 25% since the beginning of 2025, despite a generally positive stock market environment, raising questions about its future performance and potential buying opportunities [1][2]. Financial Performance - DexCom reported third-quarter earnings on October 30, with revenue of $1.2 billion, reflecting a year-over-year increase of 22%. However, this growth is compared to a period of slow growth last year, leading to skepticism among investors regarding its sustainability [4]. Market Concerns - Investors are increasingly bearish on DexCom due to the emergence of GLP-1 weight loss drugs, which may reduce the demand for continuous glucose monitoring (CGM) devices. These drugs have shown effectiveness in lowering glucose levels for diabetes patients, potentially impacting DexCom's market [5][6]. Stock Valuation - DexCom's stock is currently trading at levels not seen since the COVID-19 crash of 2020, with a forward price-to-earnings (P/E) multiple of 26, which is lower than its historical average. This situation may present a buying opportunity for investors [7][8].

Group 1: Company Overview - DexCom, Inc. is a leading provider of continuous glucose monitoring (CGM) devices, serving millions of individuals managing Type 1 and Type 2 diabetes, as well as those tracking glucose for wellness purposes [2] - Founded in 1999, DexCom pioneered accurate, real-time glucose monitoring, shifting the standard of care away from periodic finger pricks [2] - The company's competitive edge lies in product performance and integration across platforms, with devices like G6, G7, and Stelo offering seamless connectivity compared to competitors [2] Group 2: Business Model and Financial Performance - DexCom's business model is highly lucrative, with hardware representing only 5% of revenue and disposable sensors accounting for 95%, supported by industry-leading retention rates [3] - Despite its strong business model, the stock has underperformed over the past five years, reflecting a negative 20% total return due to growing competition and market pressures [3] - The company faces challenges from Abbott's low-cost FreeStyle Libre platform and Medtronic's investments in next-generation CGM, alongside potential reduced demand from Type 2 patients due to the adoption of GLP-1 drugs [3] Group 3: Market Opportunities - CGM penetration remains low in key populations, including over 100 million Type 2 diabetics and prediabetics in the U.S., with expanding insurance coverage enhancing adoption potential [4] - International markets, such as Japan and Saudi Arabia, are underpenetrated, offering additional growth opportunities [4] - The entry into over-the-counter and wellness markets with Stelo may create new revenue streams for the company [4] Group 4: Investment Thesis - The combination of a high-margin, sticky business model, innovation leadership, and underpenetrated markets provides a compelling risk/reward profile for investors [4] - Previous bullish theses highlighted product innovation, Type 2 diabetes expansion, and user growth despite margin pressures, although the stock has depreciated about 6% since then due to competition and cost headwinds [5] - The current thesis emphasizes reimbursement gains and platform integration, while also acknowledging risks associated with GLP-1 drugs [5]