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 real estate information website Zillow (NASDAQ:ZG) dipped as much as 20% earlier in the trading session after reporting third-quarter earnings results and issuing a disappointing fourth-quarter forecast.

So what: For the quarter, revenue rose 67% to $31.9 million as the company turned in a profit of $0.07, reversing a year-ago loss of $0.02, perfectly matching Wall Street's estimates. The wheels fell off the bus, however, when Zillow outlined its guidance for the upcoming quarter. Revenue is expected to be in the range of $30 million to $31 million versus the Street's forecast of $32.4 million -- definitely not what investors in a company with a trailing P/E well over 100 want to hear.

Now what: I've been critical of Zillow's frothy valuation for a while, but that was largely because of the shakiness of the housing sector. With the housing sector firming, we're beginning to see that Zillow's growth is slowing because of increased competition from Trulia (NYSE: TRLA) and the need to make acquisitions to drive growth. Even following today's cautious outlook and large share price haircut, Zillow is still trading at 41 times forward earnings, which leads me to believe more downside could be in the cards.

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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.