Over the past six months, 10x Genomics has been a great trade, beating the S&P 500 by 10.9%. Its stock price has climbed to $13.25, representing a healthy 17.4% increase. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Is there a buying opportunity in 10x Genomics, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Is 10x Genomics Not Exciting?
We’re happy investors have made money, but we're cautious about 10x Genomics. Here are three reasons why there are better opportunities than TXG and a stock we'd rather own.
1. Lackluster Revenue Growth
Long-term growth is the most important, but within healthcare, a stretched historical view may miss new innovations or demand cycles. 10x Genomics’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 6.5% over the last two years was well below its five-year trend. 
2. Cash Burn Ignites Concerns
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
While 10x Genomics posted positive free cash flow this quarter, the broader story hasn’t been so clean. 10x Genomics’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 18.8%, meaning it lit $18.79 of cash on fire for every $100 in revenue.
3. Previous Growth Initiatives Have Lost Money
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
10x Genomics’s five-year average ROIC was negative 50.9%, meaning management lost money while trying to expand the business. Its returns were among the worst in the healthcare sector.
Final Judgment
10x Genomics isn’t a terrible business, but it doesn’t pass our quality test. With its shares topping the market in recent months, the stock trades at $13.25 per share (or a forward price-to-sales ratio of 2.8×). The market typically values companies like 10x Genomics based on their anticipated profits for the next 12 months, but it expects the business to lose money. We also think the upside isn’t great compared to the potential downside here - there are more exciting stocks to buy. We’d suggest looking at one of Charlie Munger’s all-time favorite businesses.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
