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 renewable oils maker Solazyme Inc (NASDAQ:TVIA) fell nearly 60% after announcing earnings and a huge reduction in future expected production levels.

So what: Reported third-quarter revenues were up 65% to $17.6 million and net loss rose 29% to $39.7 million, or $0.50 per share. But the real story here is about Solazyme's inability to ramp up production in Moema, Brazil, or Clinton, Iowa. 

Part of the problem is that Solazyme realized it wasn't going to get enough customers to offtake 120,000 metric tons (MT) of production annually making commodity products. So, management made the strategy shift to making higher-value products that will generate higher margins.

The downside of this strategy is that production will be well below the nameplate capacity at Solazyme's production facilities. Therefore, revenue won't get anywhere near Wall Street's expectation of $274.8 million in 2015.

But the bigger story here is that both facilities are ramping up more slowly than projected and may be running into very serious production issues. The Clinton, Iowa, facility has produced about 2,500 MT of product this year, well below its 20,000 MT capacity, and well behind plans to be at full production capacity early this year. 

Moema, Brazil is even more concerning for investors. The plant was supposed to be operational by the fourth quarter of 2013 with production capacity of 100,000 MT. But Solazyme is well behind that goal and has already announced it won't be consolidating the Moema facility, meaning revenue will only be about $70 million next year, well below expectations.

Now what: The broad story for Solazyme this quarter is the market pricing in lofty expectations and the company coming to the realization that it wouldn't be able to hit those lofty goals. I think the strategic shift to higher-value products is the right one, but it's uncertain whether or not the company can withstand the cash burn of unutilized capacity while it develops end markets.

We also have some confirmation that from an engineering side, the production facilities aren't producing as much as expected, which fellow Fool Maxx Chatsko covered in his article earlier today.

With Solazyme I'd take the approach that I've taken with many emerging technologies: Don't believe management's or Wall Street's lofty projections until the company proves it can actually do what it says it can do. In Solazyme's case, it certainly hasn't done that.