What: Shares of enterprise storage company Nimble Storage (NYSE:NMBL) tumbled on Friday following the company's third-quarter report. Nimble missed analyst estimates for both revenue and earnings, and its guidance for the fourth quarter came in well below expectations. At 11:30 AM Friday morning, the stock was down nearly 50%.

So what: Nimble reported quarterly revenue of $80.7 million, up 37% year-over-year, but about $6.7 million shy of the average analyst estimate. Adjusted for currency, Nimble's revenue would have grown at a slightly faster 41% rate. The company pointed to its enterprise investments taking longer than expected to become fully productive, and its commercial revenue growth being negatively affected by the company's shift in investment from its commercial business to its enterprise business.

Non-GAAP EPS came in at a loss of $0.14, slightly better than a loss of $0.15 during the same period last year, but $0.06 lower than analysts were expecting. Nimble CFO Anup Singh explained that earnings will continue to be pressured going forward. "We plan to make some key investments to drive growth that will constrain short-term profitability." Singh said. "We believe our planned investments will improve revenue growth as well as operating leverage over time. We expect that it will take several quarters to realize the impact of these investments and have factored that into our guidance for Q4FY16."

Now what: Nimble expects its fourth-quarter revenue to be between $87 million and $90 million, well short of analyst expectations of $99.2 million. Non-GAAP EPS is expected to come in between -$0.11 and -$0.13, while analysts were expecting a break-even quarter.

Prior to Nimble's earnings report, the stock traded at a little less than six times trailing-12-month sales. With Nimble's stock price based on its ability to grow, it's not surprising that the stock has collapsed following an earnings and guidance miss of this magnitude. Nimble's report also sent shares of fellow storage upstart Pure Storage (NYSE:PSTG) tumbling, with the stock down about 13% at 11:30 AM. Pure Storage went public last month, and its valuation is even loftier than Nimble's was prior to earnings.

Timothy Green 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.