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What: Shares of chemical company Huntsman Corporation (NYSE:HUN) plunged 25% in early trading following an earnings warning from management.

So what: After the market closed on Friday, management said there were "certain trends which are expected to impact third-quarter earnings." Not surprisingly, they're almost all negative.  

Management pointed to lower titanium dioxide pricing, currency headwinds, soft demand in Asia-Pacific, lower oil prices, and a delay in lower raw-material benefits as negatives for the company. They are staying the course strategically and think cost savings initiatives will start paying off next year with a $300 million improvement in cash flow.

Now what: The press release was a little cryptic on exactly how big an impact these headwinds would have in the third quarter, only saying that the company expects third and fourth quarter EBITDA to be in a similar range to the prior year at about $300 million.

I'm not concerned about a single quarter's miss because that can present a buying opportunity in a company that's still generating a lot of cash. My concern is that operations will continue to worsen, particularly if demand in Asia-Pacific doesn't return as quickly as the market might think. I'm cautiously optimistic on Huntsman's value right now, but I want to hear more detail from management after the third quarter conference call before calling this a great buy for investors. There's simply too much potential danger ahead.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.