After the stock of DexCom plunged over 30 percent, CNBC's Jim Cramer had to investigate why shares of the top medical device maker got decimated.
"DexCom's problem is pretty straightforward. A week ago, we learned that gigantic company Abbott Labs had received FDA approval for its new FreeStyle Libre Flash glucose monitoring system for people with both type 1 and type 2 diabetes. And in many ways, this represents a major competitive threat to DexCom," the "Mad Money" host said.
DexCom is the leading maker of glucose monitoring systems, so analysts saw Abbott's new system, which is the first and only one to offer blood-sugar monitoring without the routine finger-prick, as a formidable challenge.
But Cramer said that DexCom has come back from similar challenges before and should be able to stand up to Abbott's new product, perhaps even offering a version of its own eventually.
"A year ago DexCom got slammed based on competitor concerns from another giant, Medtronic, and its so-called artificial pancreas — a glucose monitor combined with an insulin pump — but the stock was able to make a dramatic comeback, as DexCom's numbers continued to be excellent," Cramer said. "Anyone who's owned this stock has been obliterated by the Abbott news, and that's terrible. Mea culpa again. But at these levels, I believe DexCom will be able to rebound, even if it might take some time."