Shares of Proto Labs (NYSE:PRLB) fell as much as 27.6% in trading Thursday after the company reported results for the fourth quarter of 2018. At 12:30 p.m. EST, shares were still down 22% and showed no signs of a rebound.
Quarterly revenue was up 19.7% to $112.8 million, and net income jumped 35.1% to $19.3 million, or $0.71 per share. Adjusted for one-time items, net income was $20.3 million, or $0.74 per share.
Top- and bottom-line growth was strong but fell short of the expectations Wall Street had put on the company. Analysts were modeling revenue of $115 million and earnings of $0.79 per share.
Management said orders were weaker than expected in December, and the acquisition of Rapid Manufacturing was performing below their expectations.
Stocks are priced on investor expectation for earnings, and that often coincides with analysts' earnings estimates. So, when a company misses estimates and management gives some fairly negative comments about the end of the year, it can spook investors. That appears to be what happened today, despite solid results for the quarter.
I wouldn't be too concerned about Proto Labs' long-term trajectory, because the company is well positioned in the rapid-prototype market and its revenue and profits are growing quickly. Ultimately, that's what will drive this stock higher; the investment thesis hasn't changed materially today.