Illumina (ILMN) is down big today (~15% as of this writing) in reaction to their preliminary Q2 results showing significantly lower revenue than was expected. Here are the numbers:

• Expected revenue of $835M, versus an earlier estimate of $888M
• Lowered 2019 revenue growth guidance to 6% from 13 – 14%

Those are some pretty big drops, and I’m a little surprised the stock isn’t down more, especially considering there was some worrying talk about “ongoing weakness” in the direct-to-consumer (DTC) market. Yes, 15% is a decent sized drop, but for context, it just brings the stock back to where it was about a month and a half ago.

To further complicate matters, Illumina’s proposed merger with Pacific Biosciences is facing some increased scrutiny that could endanger the merger.

I’m torn on what to do. On one hand, I absolutely don’t want to overreact to a single earnings report. Out of all of the positions in the Freedom Portfolio, Illumina has been the fifth best performing, beating the market by 83 percentage points since I started my position. On the other hand, the primary investment thesis for Illumina has been the growth in the gene sequencing market. If that growth is showing signs of slowing down or if their ability to profit off the growth is threatened by the merger with Pacific Biosciences not going through, that would be a major concern.

I’m not taking any action today, but I’m going to start thinking about selling somewhere between a third and half of my Illumina position and reinvesting the proceeds somewhere else where I think the risk/reward is more appealing. Anybody have any suggestions?