Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Internet marketing specialist ReachLocal (Nasdaq: RLOC) plunged as much as 17% in early trading Wednesday after its revenue forecasts disappointed investors.

So what: ReachLocal, which went public last year, said it sees first-quarter revenue of $83 million to $85 million, versus the average analyst estimate of $86 million. Additionally, the company is now forecasting full-year revenue of $380 million to $400 million, while Wall Street was expecting $407 million.

Now what: I wouldn't be so quick to pounce on this plunge. The stock has performed particularly well since its May IPO, but today's news has Mr. Market questioning if there's a little too much optimism built into the price. ReachLocal's growth prospects certainly remain enticing, but with rising costs and price-pressuring gorillas like Google and Microsoft to worry about, investors would do well to wait for a bigger pullback before jumping in.

Interested in more info on ReachLocal? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. ReachLocal and Google are picks of Motley Fool Rule Breakers. Google is also an Inside Value choice, as is Microsoft. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Google and Microsoft. Try any of our Foolish newsletter services free for 30 days.

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