What: Shares of semiconductor company Sigma Designs (SIGM) slumped on Thursday despite the company beating analyst estimates for both earnings and revenue when it reported its second-quarter results. At 12:20 p.m., the stock was down about 15%.

So what: The headline numbers from Sigma's second-quarter results looked good. Non-GAAP revenue came in at $58.1 million, up 35.7% year-over-year and a few million dollars higher than the average analyst estimate. This growth was driven by a 146% year-over-year increase in sales of Smart TV chips, which now account for 42% of revenue, as well as a 97% rise in IoT device sales.

Sigma reported non-GAAP earnings of $0.12 per share, a 100% increase year-over-year and $0.06 higher than analysts were expecting. Operating expenses declined year-over-year on both a GAAP and non-GAAP basis, with both R&D and sales & marketing spending declining despite the company's strong revenue growth.

Now what: With Sigma's results largely positive, the big decline in the stock price following earnings doesn't have a simple explanation. There were some negatives in Sigma's earnings report: The company expects its Z-Wave IoT device sales to dip next quarter due to an inventory adjustment, and the media connectivity segment and set-top box segment are expected to post flat and slightly lower sales, respectively.

Perhaps the bigger issue affecting the stock today is the valuation. Going into earnings, Sigma's stock had more than doubled over the past year. The company has been unprofitable on a GAAP basis since 2011, and its revenue is currently well below peak levels from 2010. Given this recent rise in the stock price, expectations were likely very high going into earnings, and even largely positive results couldn't prevent the stock from falling.