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 LED specialist Cree (NASDAQ:CREE) plunged by more than 21% Wednesday after the company reported its fiscal fourth-quarter earnings results.

So what: When all was said and done in Q4, Cree's revenue rose 7% sequentially and 22% year over year to $375 million, which translated to impressive 182% year-over-year growth in Cree's GAAP earnings to $0.23 per share. On an adjusted basis, net income rose 56% to $0.38 per share.

However, those results were largely in line with analysts' expectations, and the company issued disappointing forward revenue guidance for next quarter between $380 million to $400 million, and non-GAAP net income from $0.36 to $0.41 per share. That was enough to spark downgrades from a number of analysts, who were expecting fiscal first quarter earnings of $0.43 per share on $398.4 million in sales. 

Now what: Going forward, while that growth seems impressive enough on the surface, the weak guidance has investors second-guessing whether shares of Cree are really deserving of their lofty valuation, as they trade for roughly 101 times last year's earnings, 26 times next year's estimates, and 37.5 times last year's $186.9 million in free cash flow. As it stands, I think it'd be wise to let the dust settle before you go jumping into any new long positions.