What happened

Shares of Universal Display (NASDAQ:OLED) dropped 25.3% in November, according to data from S&P Global Market Intelligence, following the OLED technologist's latest quarterly results and concerns for slowing smartphone demand. 

On the former, Universal Display stock fell more than 20% on Nov. 2 alone -- essentially giving back the equally steep gains shareholders enjoyed in the days leading up to its report -- after the company announced quarterly revenue had climbed 25.8% year over year to $77.6 million, translating to roughly 70% increase in net income to $22.8 million, or $0.48 per share. 

However, those figures were also reported under newly adopted accounting standards that changed the way Universal Display recognizes revenue. Under the old standards, revenue would have climbed to $91.6 million, and net income would have been $34.2 million, or $0.72 per share. Both figures easily outpaced consensus expectations for earnings of $0.66 per share on revenue of $91.4 million.

Transparent OLED reading light illuminating a book in the dark


So what

In any case, driving Universal Display's top line was a 9% increase in OLED material sales, to $51.2 million, 94% growth from royalties and license fees, to $23.3 million (or $36.9 million under the old accounting standards), and a 13.5% increase in contract research services sales to roughly $3 million.

If you're wondering why Universal Display stock plunged, look no further than guidance: Management followed by significantly reducing its full-year outlook to call for revenue of $240 million to $250 million (or $315 million to $325 million under the old accounting standards), down from $280 million to $310 million before.

Universal Display CFO Sidney Rosenblatt explained that, while the company is seeing a ramp-up in launches for smartphones featuring new OLED displays, "the magnitude of the second-half pick-up in our material sales is not shaping up to the degree that we had earlier forecasted." 

But Universal Display wasn't quite finished falling yet. Less than two weeks later, shares plunged more than 12% amid a broader pullback in tech stocks and as a key smartphone component supplier reduced its own outlook, with the latter sparking fresh speculation surrounding the intensity of smartphone-industry headwinds.

Now what

That said, Universal Display investors should also take note that the company predicts 2019 will be "a meaningful year of growth," both as new manufacturing facilities begin to ramp up and as new OLED devices and form factors continue to hit the market.

As such, I think Universal Display's recent pullback is a gift for patient shareholders willing to open or add to their positions before that happens.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.