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 through-the-mail and online movie kingpin Netflix (Nasdaq: NFLX) were getting frantically mailed back by investors today as the stock fell as much as 37% after the company reported third-quarter results.

So what: Based on the stock's action today, it might be a surprise to hear that Netflix actually beat analysts' targets for both profit and revenue significantly. For the quarter, the company notched $1.16 in per-share profit on $822 million in sales, easily above the respective $0.95 and $812 million targets.

However, the good news was badly marred by the fact that the company lost more than 800,000 net subscribers during the quarter. While a loss may have been in the cards because of the company's price hike, the size of the loss caught many investors by surprise.

Now what: Let's not get too carried away here. Though the big subscriber loss is significant, total U.S. subscribers are still up an impressive 42% from a year ago. Total company revenue gained 49% year over year, while profit per share jumped 66%. To be sure, this isn't a dead company walking.

However, even after today's massive haircut on the stock -- not to mention the 75% drop from its 2011 high -- it's still trading at nearly 18 times trailing earnings. The challenge with richly priced stocks is that investors are expecting a lot and when those hopes aren't met -- or there's at least a concern that they won't be met -- the stock market justice can be swift and brutal.

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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.