What: Shares of gene sequencing company Pacific Biosciences of California (PACB 4.87%) plunged 23% in midday trading on Thursday after the company reported earnings that underwhelmed investors.

So what: Fourth-quarter revenue surged 115% to $36.3 million on the back of a $20 million contractual milestone payment from Roche. But that still fell short of the $38.4 million in revenue that analysts expected. On the bottom line, net loss improved from $19.0 million a year ago to a $1.4 million loss, or $0.02 per share, which met expectations.  

The bigger news may be that Pacific Biosciences announced it will sell as much as $30 million in shares on the open market, causing further dilution to shareholders.  

Now what: Pacific Biosciences is in the midst of transitioning to a new product called the Sequel System that was launched in Q4 and that makes making or meeting estimates tough. Management said initial demand for Sequel has been strong, but it's going to ramp up slowly in 2016 so it has a smooth launch. That could be part of the disappointment today, with investors expecting a quicker ramp.

I don't think the fundamental story for Pacific Biosciences has changed, but there's uncertainty about when the company may see a lot of revenue growth and when that may lead to breakeven cash flow. And that's not uncertainty investors are willing to buy today.