Source: Liquidity Services.

What: Shares of Liquidity Services (NASDAQ:LQDT) fell as much as 20% on Thursday. The biggest drop came early in the trading session, and the recovery started quickly; As of 1:50 p.m., Liquidity Services had recovered to a less drastic 14% single-day drop.

So what: In the early morning hours, the provider of online surplus auction services reported fourth-quarter and full-year 2015 results. The gross merchandise volume flowing through Liquidity Services in the fourth quarter was $170.7 million, down 24% year over year.

Adjusted EBITDA profits were $1.9 million, down from $9.1 million in the year-ago period. Adjusted earnings, which exclude a $51 million goodwill impairment charge and other items, fell from $0.13 to $0.07 per diluted share.

These results were well within management's guidance in most cases, and well above the top end of the guidance range in the case of adjusted earnings. There, management had only expected to report $0.02 per share at most.

Now what: So the fourth-quarter results weren't terrible, yet the report triggered a big price drop.

The key is found in management's timid outlook for the next quarter. Citing a wide range of factors from changing Department of Defense orders to macroeconomic softness in the energy and industrial sectors, Liquidity Services now expects first-quarter gross merchandise volumes of roughly $150 million, adjusted EBITDA somewhere near the breakeven point, and adjusted bottom-line losses of approximately $0.05 per share.

To put these goals into perspective, the first quarter of 2015 saw GMV of $245 million and adjusted earnings stood at $0.38 per share, both with a bullet. EBITDA was $17 million. In short, Liquidity Services is facing a terrible first quarter of 2016 any way you slice it, and many investors headed for the exits in a panic on this news.

Liquidity Services CEO Bill Angrick still saw a silver lining on these clouds:

Our significant investment in delivering the next generation of cloud based marketplace, analytics and returns management solutions will transform how the world's largest organizations capture value in their supply chain and leverages our unique insights from transacting over $6 billion in surplus goods.

As our business undergoes this critical transformation, we are excited by the new opportunities and long-term value we are creating.

In that early morning crash, Liquidity Services set a fresh multiyear low, going back to prices not seen since 2009. The stock now trades at 20 times trailing earnings

Anders Bylund has no position in any stocks mentioned. The Motley Fool recommends Liquidity Services. 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.