When a stock falls over a cliff after earnings, it can put investors into an unnerving situation: Should you average down, or simply get out of the stock entirely? It's not always an easy question to answer, especially since the markets can sometimes overreact to a bad quarter.

Diabetes specialist (NASDAQ: DXCM) saw its stock fall by over 40% just with the release of its latest earnings numbers. The sell-off might have you believe that the business is broken, or at least that it's in deep trouble. But is that really the case?

Let's take a look at whether DexCom is a stock to avoid or it's a good time to add it to your portfolio.

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Source Fool.com